The International Energy Agency (IEA) has forecast a contraction in global oil demand for 2026, marking the first annual decline since 2020.
The agency projects demand will fall by 1.047 million barrels per day (bpd) next year, a significant shift driven by ongoing geopolitical tensions in the Middle East.
The forecast follows a sharp deterioration in monthly data, with global oil demand falling by 5.3 million bpd in May to 97.9 million bpd, the lowest level recorded this year.
The IEA attributes this historic downturn primarily to the ongoing conflict in Iran, which has disrupted supply chains and dampened consumption across key markets.
This projection stands in contrast to earlier assessments from the U.S. Energy Information Administration (EIA), which had suggested that global oil production and trade flows would fully recover from Iran-related disruptions by the end of 2026.
The IEA’s more cautious outlook highlights growing uncertainty around the duration and economic impact of the conflict.