The International Energy Agency (IEA) has revised its outlook for 2026, projecting a decline in global oil consumption of 1.6 million barrels per day—up from its earlier estimate of 1 million barrels—as renewed Middle East hostilities and chokepoint disruptions dampen supply recovery and lift prices, curbing demand.

Demand is expected to drop by 2.8 million barrels in Q3 after a 4.9 million-barrel fall in Q2, before rebounding in the final quarter. The IEA now sees a 1.8 million-barrel daily deficit in Q3, more than double its prior projection of roughly 800,000 barrels.

Tighter product markets pushed Atlantic Basin refining margins to record highs in July, as seasonal diesel, jet fuel and gasoline demand collided with supply shortages and depleted inventories.

The outlook underscores how persistent geopolitical turbulence at key shipping chokepoints continues to tighten near‑term market balance, keeping fuel prices elevated and demand restrained.

The forecast signals a slower contraction pace but persistent supply risk.

Analysts warn that heightened hostilities could accelerate demand decline, complicating recovery.