IEA reviews again in low forecast for oil demand in 2026

A forecast published today by the International Energy Agency (IEA) specified that the decline will focus on medium distillates (fuels obtained from petroleum distillation) and petrochemical raw materials, especially in Asia.

In 2027, demand could recover by 2.6 million barrels a day, compensating for the expected fall for this year, depending on the estimated EIA.

In August, world oil production dropped 1.6 million barrels a day to 100.1 million, while more than 10 million barrels of Gulf production remained paralysed due to increased security risks arising from the Middle East conflict.

According to IEA calculations, world supply will decrease by 5.7 million barrels per day this year to 100.7 million, as production recovery in the Gulf is delayed until 2027, when production may recover by eight million barrels per day.

The growth of production outside the Organization of Petroleum Exporting Countries (OPEP) will be led by producers from the Americas (United States, Canada, Brazil, Argentina and Guyana), which will contribute 1.4 million barrels per day in 2026 and another million barrels per day in 2027.

In August, refineries reached a seasonal maximum of 81.4 million barrels a day, plus 960,000 barrels a day than in July, but minus 4.2 million barrels a day than in the previous year.

The global refining activity is expected to decrease 2.6 million barrels a day in 2026, to 81.5 million barrels a day, the international organization provides.

The IEA also noted that the refining margins reached record levels in the Atlantic basin, driven by the increase in the price of diesel, while the increase in freight exerted pressure on the profitability of Singapore refineries.

Registered world inventories dropped another 95 million barrels in August.

The volume of crude oil stored on ships decreased by 65 million barrels, while the attacks again affected oil tanker traffic from the Middle East.

The inventories outside the Organization for Economic Cooperation and Development (OECD) fell by 52 million barrels, led by China, while in the countries of that organization they increased by 23 million barrels, as the increase in trade inventories compensated for a drop of 19 million barrels in government reserves.

The crude oil ‘North Sea Dated’ went up $7.61 per barrel in August, to an average of $91, before reaching the $ 113.48 on Tuesday.

In this sense, the market structure has entered into an extreme ‘backwardation’ situation – which occurs when the immediate delivery price of an asset is drastically higher than future delivery prices – reflecting a restricted market due to disruptions in the Middle East and Russia and the shift of demand to the crude oil in the Atlantic basin.

Oil tanker costs also increased significantly due to increased safety risk and stronger demand for ships.

The recovery planned for 2027 will largely depend on the development of supply disruptions and on the fact that negotiations between Washington and Tehran will allow oil flows to be normalised, the IEA concluded.

After the outstanding increases in oil and gas prices on Thursday, the price of the reference generic Brent oil barrel contract in Europe is 1.47% to 106.05 dollars, and that of the West Texas Intermediate (WTI), a reference in the United States of America (USA), is 1.35% to 101.10 dollars.