IEA forecasts oil demand decline in 2026 and rebound in 2027
The International Energy Agency has forecast that world oil demand will fall by 2.7 million barrels per day in 2026, reaching 102.3 million barrels per day, before rebounding by 2 million barrels per day in 2027. The outlook was published in the IEA Oil Market Report for November 2026.
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The agency said the year-on-year decline is expected to ease to 2.7 million barrels per day in the fourth quarter of 2026, down from an average fall of 4.4 million barrels per day across the second and third quarters. It said the annual average drop in 2026 will remain 2.7 million barrels per day after steeper declines of 5 million barrels per day in the second quarter and 3.8 million barrels per day in the third quarter.
According to the report, global oil demand continues to be dragged down by ongoing disruptions to exports of refined products and LPG from the Gulf, leaving demand at roughly half of pre-war levels. The IEA also cited high fuel prices as a continuing constraint.
It said growth in 2027 will be led mainly by LPG, ethane and naphtha, which will account for around 80% of the increase as supply chains normalise. The agency said transport fuels will see only a very modest gain because high prices are accelerating electrification and fuel efficiency across the global car fleet.
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It added that attacks on shipping remain a downside risk because they undermine maritime security. The report said the global oil market is expected to return to a surplus in the fourth quarter of 2026, with a more substantial build in 2027, while oil supply is expected to reach an average of 108.1 million barrels per day in 2027 after an increase of 6.6 million barrels per day.
