Global Oil Demand Heads for Contraction As Iran War Chokes Flows, IEA Says

By Giulia Petroni

Global oil demand is set to contract this year as the Iran war and near-closure of the Strait of Hormuz choke supplies and upend supply chains, the International Energy Agency said, marking a sharp reversal from last month's outlook.

The Paris-based organization--a group of Western nations and their allies--now sees global demand shrinking by 80,000 barrels a day this year, from prior expectations of 640,000 barrels a day of growth. In the second quarter, demand is forecast to fall by 1.5 million barrels a day, the sharpest decline since the Covid-19 pandemic.

"The outlook for global oil market balances has rarely been as uncertain, " the IEA said in its closely watched monthly report on Tuesday. "Disruptions to oil supply and trade from the Middle East war continue, aggravating crude and product shortages and pushing prices to levels that are undermining demand."

The agency's forecast assumes oil and gas deliveries from the Middle East to international markets resume by midyear, though not to pre-conflict levels. If the Strait of Hormuz reopens and trade routes are secured, the IEA estimates it would take about two months to restore steady exports.

Write to Giulia Petroni at [e-mail]

(END) Dow Jones Newswires

04-14-26 0419ET