What are the IEA's 2026 forecasts for global crude oil demand and supply, and how do they compare to pre-war expectations?

The International Energy Agency (IEA) forecasts that global crude oil demand will contract by 420,000 barrels per day year-on-year in 2026, resulting in daily consumption of 104 million barrels — a 1.3 million barrel/day decline from its pre-war forecast. Simultaneously, global oil supply is expected to decline by 3.9 million barrels/day on average in 2026 due to ongoing disruption from the Gulf conflict, with supply flows projected to stand at 102.2 million barrels/day — still below the 104 million barrels/day demand level, maintaining a market deficit. This contrasts sharply with pre-conflict conditions, as Gulf countries affected by the Strait of Hormuz closure were producing 14.4 million barrels/day less in April alone, despite Saudi Arabia’s use of its Yanbu pipeline.

Why does the IEA expect the oil market to remain in deficit through most of 2026, even if demand begins recovering later in the year?

The IEA expects the oil market to remain in deficit through much of 2026 because, although demand may swing back to growth toward year-end if a ceasefire allows gradual resumption of flows through the Strait of Hormuz starting in Q3 2026, supply recovery will be slower than demand recovery — meaning available volumes will continue to undershoot required crude oil needs. This imbalance persists despite falling demand, as supply losses have been severe: global supplies declined by 1.8 million barrels/day in April alone, bringing total losses since February to 12.8 million barrels/day, and inventories are already drawing at a record clip, heightening price volatility ahead of the peak summer demand period.

Global crude demand, supply expectations collapse as Gulf conflict continues – IEA

May 13, 2026

The IEA forecasts a significant contraction in global crude demand and supply due to ongoing Gulf conflict disruptions, heavily impacting petrochemicals and aviation sectors. Markets are expected to remain in deficit through much of 2026, driving potential price volatility.

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