IEA projects faster growth in global oil demand in 2026 as prices ease

Global oil demand growth is expected to average 930,000 barrels per day (bpd) in 2026, up from 850,000 bpd in 2025, as economic conditions stabilise following last year’s tariff-related disruptions and oil prices remain lower than a year earlier, the International Energy Agency (IEA) projected.

A rebound in demand for petrochemical feedstocks is forecasted by the agency to drive consumption higher, although this will be partly tempered by a continued slowdown in petrol demand growth. “As in previous years, the IEA non-OECD economies are projected to deliver all of the net increase in global oil demand in 2026.”

According to the IEA, worldwide oil supply declined by 350 thousand bpd month on month to 107.4 million barrels per day (bpd) in December, standing 1.6 million bpd below the record high reached in September.

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Reduced output from Kazakhstan and several Middle Eastern OPEC producers was partially offset by a strong recovery in Russian production.

Global supply is now expected to rise by 2.5 million bpd this year to 108.7 million bpd, following growth of 3 million bpd in 2025. Non-OPEC+ producers are forecast to contribute 1.8 million bpd of supply growth in 2025 and a further 1.3 million bpd in 2026.

The report stated: “Global refinery crude throughputs surged by 2 million bpd to 85.7 million bpd in December, ahead of 1Q26 seasonal maintenance in the US, Europe, the Middle East and Asia.

“Crude runs are forecast to average 84.6 mb/d for 2026, with annual growth of 770 kb/d slightly below 2025’s 930 kb/d pace.

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“Refining margins slumped over the course of December, led by weaker profitability in Europe as middle distillate cracks halved from November’s highs.”

Global observed oil inventories rose sharply by 75.3 million barrels in November 2025, equivalent to 2.5 million bpd, with crude oil accounting for 96 percent of the build, largely in onshore storage.

OECD industry stocks increased by 7.3 million barrels to 2.84 billion barrels, broadly in line with the five-year average.

In addition, the report revealed that total observed oil stocks were 433 million barrels higher than at the start of 2025, rising at an average rate of 1.3 million bpd.

Early data suggest inventories increased further in December, led by gains in refined products.

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Benchmark crude oil prices climbed by around $6 per barrel at the start of the year following geopolitical developments involving Iran and Venezuela, but retreated by mid-month as tensions eased.

North Sea Dated crude fell by $0.99 per barrel month on month in December to average $62.64 per barrel, reflecting ample market supply.

This marked the sixth consecutive monthly decline for the benchmark, with prices touching a mid-month low of $60.07 per barrel, the weakest level since early 2021.