Global oil demand is set to decline this year for the first time since the height of the COVID-19 pandemic in 2020, according to a report from the International Energy Agency.
The drop, which the agency expects to amount to about 1 million barrels per day in 2026, is due to higher oil prices and disruptions to physical supply that weighed heavily, but unevenly, on various parts of the world, the report said.
The supply disruptions were caused by the war between the U.S. and Iran, which left ships loaded with crude oil stranded in the Persian Gulf for more than three months, unable to safely travel through the Strait of Hormuz, a major route for oil and gas shipments.
“The future of Hormuz is probably more uncertain today than it was at the beginning of the war,” said Jim Burkhard, vice president and head of crude oil research at S&P Global Energy.
Burkhard said Iran is still trying to control the strait, while the U.S. has not been able to fully restore normal operations, making a return to prewar conditions unlikely.
