IEA forecasts 1.6 mb/d oil demand drop as Hormuz closure bites

Global oil demand is forecast to contract by 1.6 million barrels per day (mb/d) in 2026 as the continued closure of the Strait of Hormuz and high fuel costs suppress consumption, according to the International Energy Agency (IEA). The Paris-based agency released its August Oil Market Report on Wednesday, 12 August, revealing a deeper decline than previously estimated. Strait of Hormuz closure impacts consumption The IEA report indicates that the annual contraction in demand will ease from 4.9 mb/d in the second quarter of 2026 to 2.8 mb/d in the third quarter. Despite the current downturn, the agency expects a return to growth in the final quarter of the year, with a projected expansion of 580,000 barrels per day. Looking ahead to 2027, global demand is expected to rebound significantly, growing by 2.4 mb/d. The global oil balance is currently facing a deficit of 1.8 mb/d for the third quarter of 2026, which is more than double the IEA's July estimate of 800,000 barrels per day. This supply gap follows a sharp plunge in global inventories, which fell by 69 million barrels in July. Total observed stocks have now dropped below 7.9 billion barrels, reaching their lowest levels since…