Business & Markets
IEA sees global oil demand falling by 2.6 million barrels a day in 2026
The agency expects demand to rebound partially next year, but remain below 2025 levels. Oil inventories are already far below prewar levels and the market is forecast to stay in deficit through year-end.
Executive summary
- A deeper annual contraction: The International Energy Agency forecasts global oil demand will fall by 2.6 million barrels a day on average in 2026, to 102.4 million barrels a day. Its September report projected a 2.5 million-barrel-a-day annual decline, making the latest revision a further 100,000 barrels a day lower.[1][2][3]
- A partial recovery still leaves a gap: The IEA expects global demand to recover by about 2 million barrels a day in 2027, but remain 620,000 barrels a day, or 0.6%, below its 2025 level. Diesel accounts for one quarter of the projected 2026 decline.[1][3]
- Supply buffers remain strained: Despite lower demand, the IEA projects the market will remain in deficit through year-end. It said observed global inventories at September’s end were 509 million barrels below prewar levels, with on-land stocks at their lowest since at least 2016.[1][3]
The IEA expects global oil demand to average 102.4 million barrels a day in 2026, a year-over-year decline of 2.6 million barrels a day. That is 100,000 barrels a day below the 2.5 million-barrel decline projected in September. The latest forecast says demand will contract by 2.5 million barrels a day in the fourth quarter compared with the same period of 2025.[1][2][3]
The agency attributes the drop to restricted availability of refined products, higher fuel prices and a weaker economic outlook during the Iran war. Diesel is expected to account for 25% of the annual decline. These figures are the IEA’s forecast of consumption, not a record of final full-year usage.[1][3]
The IEA projects oil demand will rise by about 2 million barrels a day in 2027 as it expects some normalization in supply and trade flows. Even so, global use would remain 620,000 barrels a day, or 0.6%, below the 2025 level. The agency’s projection is conditional on how the conflict, fuel availability and economic conditions evolve.[1][3]
The contraction is not a clean measure of consumers switching permanently away from oil. The IEA links it to immediate supply constraints, prices and economic weakness; its forecast also anticipates a substantial rebound next year. That distinction matters when interpreting a steep short-term demand decline as evidence of a lasting transition.[1][2]
The IEA expects global oil supply to fall by 5.8 million barrels a day on average in 2026, to 100.7 million barrels a day, before rising in 2027. It says the oil market will remain in deficit through the end of this year even as demand falls. The agency reported that observed global oil inventories were 509 million barrels below prewar levels at the end of September and on-land stocks were at their lowest level since at least 2016.[1][3]
The report describes a market under pressure from both curtailed supply and consumers cutting back as fuel becomes less available or more expensive. The projected deficit and low inventories leave the balance exposed to further disruptions, but they do not specify how prices will move or when households and businesses will feel relief.[1][3]