Global oil demand is expected to decline by 2.6 million barrels per day (mb/d) in 2026, with diesel accounting for 25 per cent of the dip, according to the International Energy Agency (IEA).
In its latest report, the IEA noted that the Iran war is weighing on global oil demand amid fuel shortages, soaring prices and deteriorating economic conditions.
Although global oil demand is expected to recover by 2 million barrels per day in 2027, it will still remain 620,000 barrels per day, or 0.6 per cent, below 2025 levels, the agency said.
“World oil demand is forecast to fall by 2.5 mb/d y-o-y in 4Q26 and 2.6 mb/d on average in 2026. As the Iran war manifests itself through restricted product availability, soaring fuel prices and a deteriorating economic outlook, diesel will register 25% of the drop. A partial recovery, of 2 mb/d, will leave 2027 global oil use 620 kb/d, or 0.6%, below 2025 levels,” it said.
The IEA, in its latest October report, said global oil supply rose by 2.5 million barrels per day (mb/d) month-on-month to 102.3 mb/d in September, driven largely by Gulf producers. OPEC+ output increased by 2.1 mb/d, led by Saudi Arabia, while the UAE accounted for most of the gains outside OPEC+.
The agency also projected global oil supply to decline by an average of 5.8 mb/d to 100.7 mb/d in 2026, before rebounding by 7.7 mb/d in 2027. However, renewed attacks in the Gulf “leave the recovery fragile.”
Apart from this, higher shipping and crude oil costs have squeezed refinery margins in Europe and Asia, while access to discounted crude has pushed US refinery margins to record highs. It noted, “Global refinery runs are set to hit a seasonal low of 81.3 mb/d in October before rebounding to 84.6 mb/d by year-end.”
Record freight and crude costs crushed margins in Europe and Asia, while discounted feedstocks propelled US margins to new highs. Global runs will drop by 2.3 mb/d, to 81.7 mb/d, this year, and rise by 2.8 mb/d in 2027.
Meanwhile, diesel markets remain under pressure as prolonged supply disruptions force countries to draw down inventories ahead of autumn refinery maintenance and peak winter demand.
Global diesel exports fell by 700,000 barrels per day year-on-year in September, as a combined decline of 1.3 mb/d in supplies from Russia and the Middle East was only partially offset by increased exports from other regions. “Global observed oil inventories edged down by 10 mb in September as a further 113 mb decline in on-land stocks was largely offset by a surge in oil on water. Non-OECD crude stocks slumped by 76 mb, with China accounting for 78% of the decline, while OECD inventories dropped by 37 mb. Global stocks were 509 mb (-2.4 mb/d) lower than at end-February,” it noted.
– (ANI)
