Global oil demand is projected to decline this year for the first time since the COVID-19 pandemic, as the prolonged US-Iran conflict continues to disrupt energy markets and weigh on consumption, according to the International Energy Agency (IEA), as cited by The Associated Press.
The agency expects global oil demand to contract by around one million barrels per day (bpd) in 2026. The anticipated decline is being driven by elevated crude prices and shipping disruptions in the Gulf after the conflict left many oil tankers stranded for over three months, unable to safely navigate the Strait of Hormuz, one of the world's most critical energy chokepoints.
According to the AP report, global oil consumption in May fell by 5.3 million bpd from a year earlier to an average of 97.9 million barrels per day. Asia accounted for the largest share of the decline due to its dependence on Middle Eastern crude, with China recording the steepest fall globally at 9%, or about 1.5 million bpd.
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The United States was the notable exception. Petrol consumption increased during the second quarter of 2026 even as pump prices climbed roughly 50% above pre-war levels in May, highlighting resilient domestic fuel demand despite higher fuel costs.
The weaker demand outlook comes even as the IEA has warned that geopolitical tensions between the US and Iran continue to pose the biggest risk to the global oil market. While the agency said oil markets currently have adequate supplies, it cautioned that they remain highly vulnerable to disruptions, particularly if the conflict affects production or shipping routes in West Asia.
According to the report, the effective closure of the Strait of Hormuz had cut as much as 14 million bpd of crude oil flows, with the resulting fuel shortages and higher prices weighing on the global economy. Although producers outside the Organisation of the Petroleum Exporting Countries (OPEC) are expected to continue increasing output and OPEC+ members are gradually restoring production cuts, the IEA said geopolitical developments continue to overshadow the market outlook.
The agency added that any disruption to exports from the Gulf region or interference with key shipping lanes could have immediate consequences for global crude supplies and fuel prices, leaving energy markets sensitive to any further escalation between Washington and Tehran.
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