Iran war slashes global oil demand outlook — IEA

The ongoing conflict involving Iran has sent shockwaves through the global oil market, prompting dire warnings from the International Energy Agency (IEA). In its latest report, the IEA highlights that the war has triggered the most severe supply shock in history, drastically altering demand expectations and disrupting critical energy corridors in the Middle East.

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The Iran war has destabilised global oil markets, cutting demand expectations and triggering what it described as the most severe supply shock in history, driven by disruptions across the Middle East energy corridor.

Nigeria, as a significant oil producer, closely monitors these global market shifts. The IEA's revised forecast projects a contraction in global oil demand for 2026, a stark reversal from earlier expectations of growth. This downward revision, particularly the steep quarterly decline anticipated in the second quarter of 2026, signals a potential downturn that could impact revenue streams for oil-exporting nations.

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global oil demand is now projected to contract by 80,000 barrels per day in 2026, a sharp reversal from last month’s forecast growth of 730,000 bpd.

The report details how rising prices, supply scarcity, and weakened industrial and aviation activity are already manifesting, especially in the Middle East and Asia-Pacific. The disruption of supply routes, most notably through the Strait of Hormuz, has led to a dramatic reduction in flows and a scramble for alternative supplies. This has resulted in historic price surges for crude oil and refined products, creating significant inflationary pressures worldwide. The IEA stresses that restoring stability hinges on resolving the disruptions in the Strait of Hormuz, a critical artery for global energy trade.

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a projected 1.5 million barrels per day drop in Q2 2026 would mark the steepest quarterly decline since the COVID-19 pandemic.