Global oil demand is set to fall by 1 million barrels per day in 2026. CNBC, citing a report from the International Energy Agency (IEA), says that global hydrocarbon consumption will drop into negative territory for the first time since the pandemic year of 2020.
The main driver of the decline is the war with Iran, which has crippled production and exports of petroleum products in the Middle East. The downturn has been highly uneven across regions and product types, and a key problem has been the closure of the Strait of Hormuz, which disrupted old-established flows from the Persian Gulf.
The IEA’s current forecast is based on an optimistic scenario — a ceasefire and a gradual resumption of shipping through the Strait of Hormuz. But amid the exchange of military strikes between the US and Iran, that outcome looks increasingly unrealistic. After a series of attacks on commercial vessels, transit through the strait has been effectively halted again.
The IEA notes that, although the balance could return to a surplus by year‑end, global oil demand depends entirely on the restoration of tanker traffic. Toril Bosoni, head of the agency’s oil division, told CNBC that markets should not rely on a quick, linear recovery. The situation remains highly uncertain, but rising production elsewhere amid falling demand leaves some chance of a surplus by December.
The geopolitical backdrop offers little reason for optimism. Despite US statements about readiness for “technical talks,” President Donald Trump at a recent NATO summit in Ankara officially declared the ceasefire over and described the Iranian attacks on ships as “acts of terrorism.”
