S&P Global Energy on Thursday slashed its global oil demand forecast for 2026 by 7,00,000 barrels per day as the US-Iran war disrupts energy supplies from the Persian Gulf region and hits demand in the second quarter, news agency Reuters reported. Global oil demand growth could fall to 4,00,000 bpd versus pre-war forecast of 1.1 million bpd, according to consultant Ethan Ng.
The decline in demand will primarily be in the Middle East and Asia in the April-June period. About 178 refineries accounting for around 40% of the world's refining capacity are affected by the closure of the Strait of Hormuz, he said.
Physical dated Brent crude prices are capped by a huge drawdown of strategic petroleum reserves by countries such as Japan and South Korea to manage fuel shortages. Diesel and jet fuel have seen the biggest price impact, the report said.
The Strait of Hormuz, through which one-fifth of the world's oil supply passes, has remained shut despite the US and Iran agreeing on a two-week ceasefire on April 8 and US President Donald Trump further extending the ceasefire on April 22. Iran's Islamic Revolutionary Guard Corps closed the ship movement from the strait in retaliation for the blockade of Iranian ports by the US Navy. This has disrupted over 600 million barrels of oil to the global markets, as per industry estimates.
Iran's Foreign Minister Abbas Araghchi has called the US blockade a violation of the ceasefire, showing the fragile nature of the current truce. Diplomatic efforts appear to have stalled.
Amid the geopolitical turmoil, US supply data offered some counterbalance. Figures from the Energy Information Administration showed declines across major refined product categories, signalling strong demand. The US has been increasingly relied upon to offset Middle East disruptions, with oil and fuel exports climbing to record levels.
Despite steady gains, oil markets remain highly reactive to developments in the Gulf. The combination of a fragile ceasefire, stalled diplomacy and constrained shipping flows suggests volatility is likely to persist.
ALSO READ: Oil Firms Seen Tapping Commercial Crude Stocks As Strait Of Hormuz Closure Hits Supply
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