Oil Demand to Fall 1.6M Barrels a Day as Hormuz Crisis Bites, IEA Warns

The International Energy Agency (IEA) now expects global oil demand to drop by 1.6 million barrels per day in 2026. The agency points to two main drivers: soaring fuel prices and ongoing disruptions in the Strait of Hormuz. The Strait of Hormuz is a narrow waterway between the Persian Gulf and the Gulf of Oman. Roughly one-fifth of the world's oil passes through it, making it a critical chokepoint for global energy supplies. According to the IEA, recent tensions in the region have raised shipping costs and insurance premiums. In turn, this has pushed fuel prices higher for consumers and businesses worldwide. The agency says these high prices are now forcing a reduction in consumption. This trend, known as "demand destruction," means that users are simply cutting back on how much oil they buy. The IEA’s forecast signals a significant shift. Instead of seeing steady growth, the global market is bracing for a contraction in demand as the economic squeeze from the Hormuz crisis intensifies.