IEA: Global oil demand to fall by 420,000 barrels per day amid Middle East crisis

According to the International Energy Agency (IEA), global oil demand is expected to fall by 420,000 barrels per day (bpd) in 2026, a decline driven by the continuing Middle East conflict that is disrupting supply chains and creating extreme volatility in international crude markets.

The IEA’s May Oil Market Report projects world oil demand to average 104 million bpd this year, roughly 1.3 million bpd below the pre‑conflict forecast.

The most pronounced drop is anticipated in the second quarter of 2026, when demand is forecast to decline by 2.45 million bpd year‑on‑year. The Organisation for Economic Co‑operation and Development (OECD) countries would account for 930,000 bpd of that reduction, while non‑OECD nations would contribute 1.5 million bpd.

The IEA notes that the petrochemical and aviation sectors are currently the hardest hit. Higher fuel prices, slowing economic growth, and energy‑saving measures are expected to further dampen consumption in the coming months.

On the supply side, global oil production dropped another 1.8 million bpd in April, falling to 95.1 million bpd. Cumulative losses since February total 12.8 million bpd.

The agency reported that output from Gulf producers affected by the closure of the Strait of Hormuz was 14.4 million bpd below pre‑war levels, describing the situation as an “unprecedented supply shock.”

Although Atlantic Basin producers have increased exports to alleviate shortages, the IEA still expects global oil supply to decline by an average of 3.9 million bpd in 2026, reaching 102.2 million bpd, assuming flows through the Strait gradually resume from June.

Refinery operations are also under severe strain. Global crude throughputs are projected to fall by 4.5 million bpd in the second quarter to 78.7 million bpd. For the full year, refinery runs are expected to decline by 1.6 million bpd to 82.3 million bpd, amid infrastructure damage, export restrictions and lower crude availability.