The International Energy Agency projects a 1.1 million barrels per day decline in global oil demand for 2026, widening a supply overhang.
The International Energy Agency revised its 2026 oil demand forecast downward to a 1.1 million barrels per day decline, up from a previously expected 420k bpd drop. Supply is projected to fall by 3.9 million bpd, unchanged from earlier estimates, creating a surplus of over 5 million bpd next year.
The agency’s prior forecast had anticipated a smaller demand contraction, while supply projections remained steady. The widening gap between supply and demand reflects heightened geopolitical risks, particularly from the US-Iran conflict, though a recent deal could ease disruptions.
Despite potential relief, operational and political constraints in the Middle East pose downside risks. The IEA expects a gradual market recovery before a return to surplus conditions in 2026.