The International Energy Agency forecasts that global oil demand will decline by about 1 million barrels per day year-on-year in 2026, marking the first annual decrease since the depths of the Covid-19 pandemic.

Strait of Hormuz Disruptions Cited

The agency pointed to the closure of the Strait of Hormuz, a critical shipping route for oil and gas, as a major factor disrupting exports through the Persian Gulf and weighing on overall demand.

An Uneven Contraction

The IEA described this year’s demand pullback as “highly skewed” both by product type and by region, suggesting the impact has been felt unevenly across different markets and fuel categories.

Recovery Underway, But Fragile

The agency noted a recovery in demand is already taking shape, though it cautioned that any renewed escalation in Middle East hostilities could further complicate the outlook.

Why It Matters for Markets

The report adds a longer-term demand angle to a week already dominated by sharp, geopolitically driven swings in oil prices, giving investors another data point to weigh alongside near-term supply disruptions.