Paris, June 17 (QNA) - The International Energy Agency (IEA) has downgraded its forecast for global oil demand in 2026, projecting a decline of 1.1 million barrels per day, in a sharp revision to its previous estimates.

The agency attributed the downward adjustment to the significant impact of the conflict in the Middle East on global energy markets.

  In its monthly Oil Market Report published today, IEA said that the anticipated downturn is almost three times greater than last month’s projections, which had suggested that markets would be returning to more stable conditions as of June.

Preliminary data further showed that oil supplies in the second quarter of 2026 tumbled by around 5% year-on-year, amid rising fuel prices and supply constraints, marking the first quarterly contraction of its kind since 2020.

The global oil inventories continued their steep decline despite weakening demand, tumbling by more than 220 million barrels during April and May, while stocks in OECD countries fell to their lowest levels since 1990, the report continued.

It added that the US-Iran agreement to cease hostilities and reopen the Strait of Hormuz, through which roughly 20% of global oil flows, could support the resumption of Middle East exports, however, it cautioned that ongoing operational and political constraints may continue to weigh on the market outlook.

Looking ahead, the IEA predicted that global oil demand would rise by around 2 million barrels per day in 2027, while supply is expected to increase by approximately 8 million barrels per day, a development that could help rebuild inventories and improve market balance. (QNA)