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The International Energy Agency (IEA) sharply reduced its global oil demand forecast on Wednesday as high prices and the ongoing closure of the Strait of Hormuz suppress consumption.
The Paris-based agency now expects demand to drop by 1.6 million barrels per day this year, expanding on its July estimate of a one-million-barrel decline.
Ongoing conflict, which erupted after US and Israeli strikes on Iran in late February, damaged Gulf oil infrastructure and prompted Tehran to effectively block the Strait of Hormuz—a bottleneck that typically handles roughly 20 per cent of global oil transit.
Despite talks of a ceasefire and rumours of an imminent deal to reopen the waterway, authorities are granting passage to only a fraction of cargo traffic, keeping global market prices volatile.
Global crude supplies reached 101.5 million barrels per day in July after a 2.4-million-barrel increase, yet overall output still lags 6.3 million barrels per day behind last year’s figures.
Fresh hostilities through early August have hampered recovery efforts, leading the IEA to project an average supply decline of 4.3 million barrels per day for the year, though it expects both supply and demand to rebound by the fourth quarter and into next year.
