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IEA Forecasts Global Oil Demand Recovery Starting 2026
The International Energy Agency (IEA) says the global oil market is already showing signs of a demand rebound, raising its 2026 outlook slightly. While demand is still expected to end the year 1 million barrels per day below 2025 levels, the agency notes that seasonal factors and the release of pent‑up demand could lift consumption in the second half of 2026.
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IEA Sees a Demand Upswing in 2026
The International Energy Agency (IEA), the OECD's energy arm, reports that global oil consumption is beginning to rise again after hitting a low in May. The agency attributes the lift to seasonal factors and the release of previously suppressed demand, alongside a recovery in the supply of refined products.
Demand outlook: Year‑on‑year declines are expected to narrow. The IEA projects a drop of 4.8 million barrels per day (mb/d) in Q2 2026, easing to 1.7 mb/d in Q3, and turning positive with a rise of 1.2 mb/d in Q4. Overall, the agency now forecasts a net decrease of 1 mb/d for the full year, a slight improvement from its June forecast of a 1.1 mb/d decline.
Supply outlook: Global oil supply surged in June, adding 4.1 mb/d to reach a total of 98.8 mb/d. This jump is linked to a partial reopening of tanker traffic through the Strait of Hormuz following the cease‑fire agreement signed on 17 June.
Even with this rebound, production remains well below pre‑war levels in the Middle East, roughly 9.4 mb/d short of the pre‑conflict baseline. The IEA now assumes an average global supply of 102.6 mb/d for 2026, contingent on a rapid de‑escalation of any new hostilities.
- Key takeaway: Demand is stabilising but still modestly down for 2026.
- Supply is robust, driven by the easing of geopolitical tensions in the Gulf.
- Oil prices may find a balance between weakening demand and strengthening supply.
Related headlines from the past week include Brent hovering around $73 per barrel, renewed geopolitical tension around the Strait of Hormuz, and mixed signals from European markets.