World oil demand is set to fall further than previously expected this year, the International Energy Agency said Wednesday, as the impact of the closure of the Strait of Hormuz deepens.
The IEA forecast demand will drop by 1.6 million barrels a day in 2026. That's 510,000 barrels a day more than its last monthly prediction in July.
High fuel prices will continue to weigh on consumption, the institution said, though demand is expected to pick up through the year and return to growth in the final quarter.
The situation in the Strait of Hormuzremains mired in confusion, with an agreement between Washington and Tehran to open the vital waterwayfailing to emergeas both sidescontinue to publicly issue demands.
"Renewed hostilities and maritime disruptions" are undermining efforts to boost global oil supply, the IEA said Wednesday, which remained 6.3 million barrels a day lower year-on-year in July.
That has driven volatility in crude prices. International benchmarkBrent crudesurpassed $100 a barrel last month, while also falling near $70 a barrel. It was last seen trading at just under $90 a barrel.
Fears of a globally destabilizing oil shortage when the strait closed in March have not materialized, due to factors including asharp decline in Chinese imports, the use ofalternative shipping routesand a drawdown of inventories. Data this week showedU.S. crude oil stockpiles have fallen below 300 million barrels, the lowest level in more than four decades.
Crude price rises have meanwhile been kept relatively contained as traders continue to jump on any signals that a deal may be in sight — a situationanalysts warn won't hold forever.
Consumers have been feeling the pain, as refining capacity — which dictates the price of products like gasoline and diesel — has become hugely constrained.
The International Monetary Fund has cut its annual economic growth forecast to 3% from 3.3% since the outbreak of the Iran war in February, with IMF managing director Kristalina Georgievasaying earlier this yearthat "all roads now lead to higher prices and slower growth."
