IEA: Global Oil Demand Set for First Annual Drop Since Covid Pandemic in 2026

The International Energy Agency (IEA), in its monthly Oil Market Report published Friday, July 10, 2026 (19 Tir 1405), said global oil demand is set to fall by about one million barrels per day (mb/d) in 2026, the first annual demand decline since 2020, the pandemic year.

According to the report, the demand contraction reached 4.8 mb/d in the second quarter of 2026 and eases to 1.7 mb/d in the third quarter, before demand rises by 1.2 mb/d in the fourth quarter of 2026. Global demand bottomed at 97.9 mb/d in May 2026, down 5.3 mb/d year on year, and the IEA expects demand to recover by more than 8 mb/d from that low by October 2026. For 2027, the agency projects demand growth of 2 mb/d.

The IEA attributed most of the contraction to disruption in Asia's import-dependent economies and to petrochemical feedstock supply chains (naphtha and LPG) that run through the Strait of Hormuz, a route that has faced serious shipping disruption in recent weeks amid renewed fighting between Iran and the United States.