Global Oil Demand Projected to Fall in 2026 for First Time Since 2020

Global oil demand is projected to decline in 2026 for the first time since 2020, Fortune reported, citing a new International Energy Agency forecast. The agency expects the annual drop to reach about 1 million barrels per day. Global oil demand averaged 97.9 million barrels per day in May 2026, down 5.3 million barrels per day from the same month a year earlier.

The largest share of the decline occurred in Asia. China recorded the steepest fall, with demand dropping 1.5 million barrels per day, or 9 percent, in May. The country cut crude oil purchases by nearly 6 million barrels per day during the spring, Fortune reported.

-Iran war. Ships carrying crude remained stranded in the Persian Gulf for more than three months because they could not safely transit the Strait of Hormuz. A fragile ceasefire permitted some vessels to exit the strait in June.

Tensions between the U.S. and Iran rose again earlier in July. Several Russian refineries damaged by Ukrainian drone strikes also reduced processing capacity. U.S. gasoline prices averaged more than $4.50 per gallon in May, more than 50 percent above prewar levels, according to AAA data cited by Fortune.

Gasoline consumption nevertheless increased during the second quarter. Jim Burkhard, vice president and head of crude oil research at S&P Global Energy, said the future of the Strait of Hormuz remains more uncertain than at the start of the war. Daniel Sternoff, senior fellow at the Center on Global Energy Policy at Columbia University, said China temporarily halted additions to its strategic petroleum reserve, which had been filling at nearly 1 million barrels per day.