IEA Cuts 2026 Oil Demand Forecast, With Partial Recovery Seen Next Year

03:32 PM EDT, 10/14/2026 (MT Newswires) -- The International Energy Agency on Wednesday lowered its global oil demand outlook for this year amid elevated fuel prices, with only a partial recovery seen in 2027. Oil consumption is now expected to drop by 2.6 million barrels a day on average in 2026 and by 2.5 million barrels in the ongoing quarter, with diesel likely to account for a quarter of the projected decline. Last month, the agency projected world oil demand to decline by 2.5 million barrels a day this year. "While global diesel prices have eased from the all-time highs of more than $200 (a barrel) reached in September, benchmarks remain nearly double the price of crude oil and their pre-crisis levels," the IEA said Wednesday. "Record diesel prices are already having broad economic consequences by raising the cost of goods and impacting real incomes, economic activity, and inflation." A projected recovery of 2 million barrels a day is expected to leave 2027 global oil use 0.6% below 2025 levels, according to the report. "Renewed attacks in the Gulf leave the recovery fragile," the IEA said. "Despite lower demand, oil market balances are forecast to remain in deficit through the end of the year, with constrained middle distillate supplies likely to persist well into 2027." In the US, the average diesel price hit a record high of $6.5276 per gallon Sept. 22, according to AAA, a travel organization that tracks fuel prices in the country. Nationwide prices of the fuel widely used to operate industrial machineries, run trucks and generate electricity averaged $6.2997 Wednesday, up from $3.6574 a year ago. West Texas Intermediate crude oil was up 1.2% at $95.30 a barrel intraday, while Brent rose 0.5% to $106.20. Both benchmarks are on track for their fourth consecutive monthly gains amid renewed tensions in the Middle East. Iran has reportedly vowed to keep control of the Strait of Hormuz -- the world's most important chokepoint for crude flows -- while President Donald Trump has ruled out strikes against Tehran before the midterm elections in the US. Elsewhere in the Middle East, hostilities between Saudi Arabia and the Iran-backed Houthis continue to escalate, CNBC reported. On Tuesday, the Organization of the Petroleum Exporting Countries cut its 2026 global oil demand growth forecast to 180,000 barrels per day from 380,000 barrels previously. For next year, the cartel now sees demand rising by 2.55 million barrel a day, up from its previous growth forecast of 2.36 million barrels. Global oil supply is projected to decline by 5.8 million barrels a day to 100.7 million barrels in 2026, the IEA said Wednesday. The agency previously expected supply to fall by 5.7 million barrels. Prolonged disruptions have kept diesel supplies tight, with combined losses from exports from Russia and the Middle East reaching 1.3 million barrels a day in September. As a result, global diesel exports last month dropped by 700,000 barrels a day from a year earlier, the agency said. Global diesel and gasoil availability fell by 1.5 million barrels a day in the second quarter of this year from a year ago, and by 1.7 million barrels in the third quarter, amid continued disruptions to Middle East supplies, "putting diesel markets under extreme pressure," the IEA said. "As the remaining buffers in the system continue to erode, in the absence of a resolution to the conflicts in the Middle East, oil markets may experience more turmoil in the months ahead before any eventual surplus emerges in 2027," the IEA said.