U.S. Energy Information Administration reduced its expectation for global oil demand in 2026. In Tuesday’s issue of its Short-Term Energy Outlook, EIA said high fuel prices, reduced fuel availability, and government initiatives are curbing oil consumption this year, particularly in Asia. EIA said reduced demand will result in the world consuming 1.1 million fewer barrels of oil each day on average than it did last year.
EIA added, “Reduced demand could limit crude oil price increases resulting from near-term disruptions in the flow of oil out of the Middle East through the Strait of Hormuz.”
Oil producers in Middle East have cut output by more than 11 million barrels per day, according to the EIA report, leading to large global inventory draws that average 6.3 million b/d in Q2 and 7.6 million b/d in Q3. As a result, oil inventories in OECD countries (Organization for Economic Cooperation and Development) are the lowest since 2003. EIA said demand is expected to increase by 2.5 million b/d in 2027 as oil prices decline and oil production in the Middle East gradually increases.