IEA Slashes Oil Demand Forecast on Global Supply Shock


   
   HOUSTON, TX -- Global oil demand is forecast to contract by 420,000 bpd 
year-on-year in 2026 to 104 million bpd, some 1.3 million bpd below projections 
made prior to the Middle East conflict, the International Energy Agency said 
Wednesday (5/13).

   Global oil supply fell a further 1.8 million bpd in April to 95.1 million 
bpd, bringing cumulative losses since February to 12.8 million bpd, due to the 
war and the ongoing closure of the Strait of Hormuz, the IEA observed in its 
monthly report for May.

   Gulf producers are now pumping 14.4 million bpd below pre-war levels. 
Assuming Strait flows gradually resume from June, the IEA projects full-year 
2026 supply will average 102.2 million bpd -- a decline of 3.9 million bpd.

   The demand contraction is sharpest in the second quarter, with a 2.45 
million bpd year-on-year drop, split between OECD nations at 930,000 bpd and 
non-OECD economies at 1.5 million bpd. Petrochemicals and aviation are 
currently the hardest-hit sectors, though the agency warned that higher prices, 
a weakening economic environment and demand-saving measures will increasingly 
weigh on broader fuel use.

   Refinery crude throughputs are forecast to plunge 4.5 million bpd in the 
second quarter to 78.7 million bpd, and by 1.6 million bpd for 2026 as a whole 
to 82.3 million bpd. Despite the turmoil, refining margins remain at 
historically elevated levels, underpinned by record middle distillate cracks.

   Global observed inventories drew by 129 million bbl in March and a further 
117 million bbl in April. OECD on-land stocks alone fell 146 million bbl -- 
equivalent to 4.9 million bpd -- last month. North Sea dated oil swung across a 
near $50 bbl range in April, averaging $120.36/bbl, before plunging from a peak 
of $144 bbl to below $100 bbl and stabilizing near $110/bbl.




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