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Middle East Conflict Reshapes IEA Outlook: Oil Demand Expected to Fall
🇳🇴 Norway /Economy & Trade

Middle East Conflict Reshapes IEA Outlook: Oil Demand Expected to Fall

From Aftenposten · (2d ago) Norwegian Critical tone

Translated from Norwegian, summarized and contextualized by DistantNews.

TLDR

  • The International Energy Agency (IEA) forecasts a drop in global oil demand in 2026, citing the conflict in the Middle East.
  • The agency predicts the sharpest quarterly decline in oil demand since the COVID-19 crisis in the second quarter of this year.
  • The IEA warns of significant disruptions to energy markets and the global economy if the conflict escalates, potentially reducing supply by six million barrels per day.

The International Energy Agency (IEA) has issued a stark warning regarding the future of global oil demand, projecting a decline in 2026. This revised outlook, detailed in their latest monthly oil report, is largely attributed to the ongoing conflict in the Middle East, which has upended previous forecasts. The agency anticipates the most significant quarterly drop in oil consumption since the height of the COVID-19 pandemic, signaling a potential downturn in energy markets.

Dempet etterspørsel vil spre seg etter hvert som mangel og høyere priser fortsetter

— IEAThe IEA's analysis on the spread of dampened demand due to shortages and higher prices.

According to the IEA, global oil demand is expected to fall by 80,000 barrels per day this year. This downward revision is substantial, reflecting a more pessimistic view than previously held. The agency highlights that the largest decreases in oil usage are occurring in the Middle East and the Asia-Pacific region, impacting key products like naphtha, LPG, and jet fuel. The IEA attributes this trend to "dampened demand" driven by shortages and rising prices, a direct consequence of the geopolitical instability.

Vi erkjenner at dette scenarioet kan vise seg å være for optimistisk

— IEAThe IEA acknowledging the potential over-optimism of their supply normalization scenario.

Looking ahead, the IEA presents two scenarios for Middle Eastern oil and gas supplies. While they hope for normalization by mid-2026, they acknowledge this may be overly optimistic. An alternative scenario, termed 'Strait Down,' paints a more concerning picture, where supply could be slashed by six million barrels per day. Such a drastic reduction would necessitate "conscious demand-reduction measures" to mitigate severe economic damage. The report also notes significant disruptions in March, with global oil supply falling sharply due to attacks on infrastructure and restricted shipping through the Strait of Hormuz, leading to the largest historical supply shock and a record monthly oil price increase.

Vi presenterer også et alternativt case der risikoen for energiproduksjon og handel i Midtøsten fortsatt er høy på grunn av en forlenget konflikt.

— IEAThe IEA introducing an alternative scenario with continued high risk in Middle Eastern energy production and trade due to prolonged conflict.
DistantNews Editorial

Originally published by Aftenposten in Norwegian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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