Global crude oil demand is set to decline this year for the first time since the Covid-19 pandemic in 2020, the International Energy Agency has said. The drop is expected to amount to around 1 million barrels per day in 2026, owing to higher prices and supply disruptions triggered by the US-Iran war, the report from the agency said on Saturday.
Hundreds of ships loaded with oil, gas and fertilisers remained stationary for months due to disruptions in the Strait of Hormuz.
“The future of Hormuz is probably more uncertain today than it was at the beginning of the war,” said Jim Burkhard, vice president and head of crude oil research at S&P Global Energy.
He said Iran’s ambition to control the Strait of Hormuz, with the US attempting to fully restore normal operations in the critical waterway, is set to remain in deadlock for a few months. Crude oil demand on average for May was 97.9 million barrels a day, down 5.3 million barrels per day from a year earlier.
China’s decrease in demand of 1.5 million barrels per day, representing a 9 per cent decline, was by far the largest globally, the report said.
China’s decision to cut down on purchasing oil from the global market as prices rose during the spring reduced its consumption by almost 6 million barrels a day, he said.
“What China said is, ‘You know what, prices are high, there’s a crisis. We have this huge inventory stock, we can sustain demand. We’re just going to cut by 50 per cent the amount of crude oil we buy,’” Burkhard said.
A fragile ceasefire enabled some ships to exit through the Strait of Hormuz in June, which allowed more oil onto the market. That led to lower oil prices.
Also read: Crude oil prices ease as US-Iran tensions show signs of easing
Follow us
