While Global Oil Demand Drops, US Drivers Keep Buying More Gas

Global oil demand is projected to decline this year, largely influenced by the US-Iran conflict. However, gasoline consumption in the United States bucked this trend, increasing during the second quarter of 2026. Despite average prices for regular gasoline surpassing $4.50 per gallon in May, a more than 50% rise since the conflict began, US drivers continued to hit the road.

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Even though it’s a really political price that people pay a lot of attention to, if you are in the higher quintiles of income in the US, you might grumble about it, but you’re not really driving less just because of that increase in prices.

Daniel Sternoff, a senior fellow at Columbia University's Center on Global Energy Policy, suggests that the declining percentage of household income spent on gasoline over the years may explain this resilience. Additionally, a transition from remote work back to in-office jobs could be contributing to increased driving. Sternoff noted that even with price increases, higher-income individuals in the US are less likely to reduce their driving solely based on fuel costs.

Jim Burkhard, vice president and head of crude oil research at S&P Global Energy, expressed concern about the Strait of Hormuz's future, calling it more uncertain than at the war's outset. He indicated that Iran's attempts to control the strait and the US's inability to fully normalize operations make a return to pre-war conditions unlikely.

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The future of Hormuz is probably more uncertain today than it was at the beginning of the war.

Global oil demand averaged 97.9 million barrels per day in May, a decrease of 5.3 million barrels from the previous year, with significant declines noted in Asia. The International Energy Agency Global expects oil demand to fall by about 1 million barrels per day in 2026, the first such decline since 2020. This drop is attributed to higher oil prices and supply disruptions caused by the US-Iran war, which stranded crude oil shipments for months. The US stands as a notable exception to this global slump, with increased gasoline usage in the second quarter despite elevated prices.

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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.