IEA

Published on
10/07/2026 – 13:58 GMT+2

Global oil demand will fall by one million barrels a day in 2026, the IEA said on Friday, making it the first annual contraction since 2020, when Covid lockdowns grounded aviation and shuttered industry.

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The comparison flatters this year’s decline in one respect, since demand collapsed by around eight million barrels a day at the height of the pandemic, but it underlines how severely the closure of the Strait of Hormuz has damaged the global economy.

The contraction is “highly skewed in both product and regional terms”, the agency noted in its monthly report.

Earlier IEA analysis traced the sharpest losses to Asia’s import-dependent economies and to petrochemical feedstocks such as naphtha and liquefied petroleum gas, whose supply chains run through the Strait of Hormuz.

At the time of writing, the front month contract on Brent crude, the international benchmark, was trading at around $76 a barrel, roughly 6% higher than before the US and Israel launched strikes on Iran in late February, and far below the peaks near $120 reached in March at the height of the conflict.

The US benchmark, WTI, was trading lower at around $72 a barrel.

June’s fragile rebound

Supply improved sharply last month, if from a desperately low base.

Global production jumped by 4.1 million barrels a day in June to 98.8 million as the partial reopening of the Strait of Hormuz allowed Gulf producers to restart shut-in wells, though output was still running 9.4 million barrels a day beneath its pre-war level.

Gulf exports, counting cargoes rerouted around the strait, climbed by 6.5 million barrels a day to 16.1 million. Before the fighting began in late February, the region shipped an average of 24 million barrels.

Global oil inventories grew for the first time since US and Israeli strikes on Iran ignited the conflict, halting months of record drawdowns, although stockpiles in the wealthiest economies shrank further as buyers held back from importing.

The truce unravels

The IEA’s forecasts rest on an assumption now under visible strain which is that a ceasefire holds and the Strait of Hormuz gradually reopens.

On that basis, global supply would contract by 3.7 million barrels a day this year, leaving production 860,000 barrels a day short of demand, before expanding by 7.5 million next year and tipping the market into surplus.

Stronger output elsewhere and weaker demand than expected before the war could still restore a surplus by the end of the year, allowing countries to rebuild depleted reserves, the IEA noted.

This week brought the second and far larger breach of last month’s truce.

After Iranian forces struck three commercial vessels on Monday and Tuesday, US Central Command hit more than 80 targets across Iran, including air defences, coastal radar and over 60 Revolutionary Guard small boats, while Washington revoked the licence permitting Iranian oil exports.

Iran fired drones and missiles at Bahrain and Kuwait, causing no major damage, and US President Donald Trump has since declared the ceasefire over.

Tehran insists the only safe passage is the route it sets in the Strait of Hormuz as traffic fell to 13 tankers on Wednesday, against an average of 33 a day the previous week, according to shipping data from Kpler.

Additional sources • AFP

US Department of Energy moves to transfer 53.3 million barrels amid rising oil prices.

The United States has announced its latest release of emergency oil stockpiles in coordination with the International Energy Agency (IEA).

The US Department of Energy said on Monday that it had begun transferring 53.3 million barrels from the strategic petroleum reserve after awarding contracts to nine companies under its emergency exchange programme.

Trafigura Trading LLC, a Texas-based commodities trading company, was granted the biggest haul of nearly 13 million barrels, with Marathon Petroleum Corporation and ExxonMobil set to receive 12.4 million barrels and 11.4 million barrels, respectively.

Macquarie Commodities Trading US, Atlantic Trading & Marketing, BP Products North America, Energy Transfer Crude Marketing, Mercuria Energy America and Phillips 66 will receive between 1.05 million and 6.55 million barrels each, according to the Energy Department.

Under the department’s exchange scheme, participating firms are required to replenish the stockpile with new barrels at a later date.

“These actions continue to move oil swiftly into the market, address near-term supply needs, and ensure that the Strategic Petroleum Reserve remains strong through the return of premium barrels,” Kyle Haustveit, the head of the department’s Hydrocarbons and Geothermal Energy Office, said in a statement.

The transfer comes after US President Donald Trump’s administration agreed in March to release 172 million barrels of crude as part of the IEA’s coordination of the largest unloading of global stockpiles in history.

Oil prices have surged since the US and Israel launched their war on Iran in late February, with Tehran’s retaliatory blockade of the Strait of Hormuz paralysing one of the world’s most important trade routes.

Maritime traffic in the strait has ground to a halt amid Iranian threats against commercial shipping, disrupting about one-fifth of the global oil trade.

Oil prices continued to edge higher on Monday after Trump dismissed Iran’s latest peace proposal and warned that the ceasefire between the sides was “on life support”, dampening hopes for a quick resolution to the conflict.

Facing growing public discontent over rising fuel prices, Trump on Monday also pledged to waive the 18.4 cents-per-gallon federal tax on petrol, though taxation is the purview of the US Congress.

Futures for Brent crude, the international benchmark, were up about 1 percent in Asia on Tuesday morning, topping $105 a barrel.

Dealing with emissions could help alleviate effects of Iran crisis on global energy supply, says report.

Tackling methane emissions in the fossil fuel sector would help efforts to hold back climate change and increase energy security, especially as the Iran crisis threatens global supplies, according to a report by the International Energy Agency (IEA).

The oil, gas and coal industries account for about 35 percent of all methane emissions from human activity, notes the IEA’s Global Methane Tracker 2026, released on Monday. However, there is little progress in reducing them, the report points out.

“There is still no sign that methane emissions from fossil fuel operations are falling, despite well-known and proven mitigation pathways,” the IEA said.

Methane, the second-biggest contributor to climate change, stays in the atmosphere for far less time than carbon dioxide, but its warming effect is roughly 80 times more potent over a 20-year period.

The IEA estimates that methane emissions from oil, gas and coal total 124 million tonnes a year. Oil is the largest source at 45 million tonnes (Mt), followed by coal at 43 Mt, and natural gas at 36 Mt.

“A further 20 Mt comes from bioenergy production and consumption, largely from the incomplete combustion of traditional biomass used for cooking and heating in developing economies,” the report added.

Oil prices have soared since the United States and Israel launched their war against Iran in late February and Tehran closed the Strait of Hormuz in response. An April ceasefire between the sides is currently holding, but global energy supplies remain limited.

The ongoing crisis is reshaping the global energy system and disrupting about 20 percent of global liquefied natural gas (LNG) trade flows.

Nearly 100 billion cubic metres of natural gas could be made available annually through a global effort to cut methane from oil and gas operations, the IEA said, estimating that nearly 15 billion cubic metres could be made available in a sufficiently short period of time to provide some relief to gas markets.

A further 100 billion cubic metres would be unlocked through the elimination of non-emergency flaring worldwide, it added.

Paris initiative

France, using its role as rotating chair of the Group of Seven (G7) bloc of industrialised powers, convened government officials, industry leaders and experts on Monday to build momentum on cutting methane emissions.

The conference aimed at reducing methane emissions ahead of the United Nations’ November COP31 summit.

“I sincerely hope that the discussions we will have today will enable us to join our forces to accelerate the implementation of effective solutions to reduce methane emissions,” French Ecological Transition Minister Monique Barbut said in a speech.

“Of course, action on methane is not a fight of any single actor and nobody can win it alone,” she added, noting that the world remains “very far” from meeting a pledge to cut methane emissions by 30 percent by 2030 compared with 2020 levels.

“Reducing methane emissions remains one of the best things we can do to slow global warming while cleaning up our air, improving public health, and increasing our energy security,” British Secretary of State for Energy Security Ed Miliband said in a video message.