The IEA Sees Oil Demand Falling 2.5 Million Barrels a Day While OPEC Sees It Rising
World oil demand will fall by 2.5 million barrels a day in 2026, the International Energy Agency said, cutting its forecast by a further 940,000 barrels a day from last month.
OPEC published its own monthly report a day earlier and cut its 2026 demand growth forecast to 380,000 barrels a day. The two agencies are 2.88 million barrels a day apart on the same year and on opposite sides of zero, on our calculation.
A contraction, not a slowdown
| IEA forecasts, September report | Change on the year |
|---|---|
| World oil demand, 2026 | -2.5 million barrels a day |
| World oil demand, 2027 | 2.6 million barrels a day |
| Total oil supply, 2026 | -5.7 million barrels a day |
| Total oil supply, 2027 | 8 million barrels a day |
As published. The 2026 demand figure was revised 940,000 barrels a day lower than in the August report and the 2026 supply figure 1.3 million lower.
The agency uses the words decline and fall, not slower growth, and it describes 2027 as a recovery that narrowly offsets this year’s losses. The pace of the contraction eases through the year, from 5.3 million barrels a day in the second quarter to 3.4 million in the third and 2 million in the fourth.
Supply is falling faster than demand. Global production fell 1.6 million barrels a day over the month to 100.1 million in August, with more than 10 million barrels a day of Gulf output shut in, and the agency now defers the Gulf recovery to 2027.
Saudi output is about half the sustainable capacity the agency assesses
| OPEC+ crude production, August 2026 | Million barrels a day | Against implied target |
|---|---|---|
| Saudi Arabia | 5.97 | -4.45 |
| Iraq | 3.86 | -0.55 |
| Kuwait | 2.04 | -0.62 |
| Total OPEC-8 | 14.85 | -5.66 |
As published in the agency’s own table. The United Arab Emirates does not appear in it at all, and Bahrain is inside an aggregated line with four other producers.
Saudi Arabia’s 5.97 million barrels a day is 49.3 percent of the 12.11 million the agency puts at its sustainable capacity, on our calculation. Kuwait is running at 70.8 percent of its 2.88 million and Iraq at 79.3 percent of its 4.87 million, also on our calculation.
The Saudi shortfall alone is 4.45 million barrels a day of the 5.66 million the eight countries are collectively below target, which is 78.6 percent of it on our calculation.
The month moved in two directions. Saudi output fell 2.27 million barrels a day from July while Iraq added 0.98 million and Kuwait 0.24 million, all on our calculation, and the OPEC+ total still fell 1.46 million.
The inventory draw is the balancing item
Global observed inventories fell 95 million barrels in August, a rate of 3.1 million barrels a day. Since February they have fallen 507 million, an average of 2.8 million a day.
August alone was 18.7 percent of that seven month total on our calculation. Non-OECD stocks drew 52 million barrels, led by China, while OECD stocks rose 23 million as commercial builds more than offset a 19 million barrel draw in government stocks. Oil on water fell 65 million barrels.
Refineries are running less and earning more
Throughput reached a summer peak of 81.4 million barrels a day in August, up 960,000 on the month but 4.2 million below a year earlier, with losses across the Middle East, Russia and Asian crude importers. The agency forecasts global runs down 2.6 million barrels a day to 81.5 million for 2026.
Margins went the other way. They reached record levels in the Atlantic Basin in August, led by sharply higher diesel cracks, while surging freight rates weighed on Singapore.
The diesel figures are the sharpest in the report. Net diesel and gasoil exports from Gulf countries averaged 390,000 barrels a day in August, just over a quarter of pre-war levels. Gulf and Russian diesel exports together were 1.6 million barrels a day below February, a month when they accounted for almost 45 percent of global seaborne trade in the fuel.
Total Gulf oil exports are estimated at around 13 million barrels a day, nearly half their pre-war level. Crude losses have narrowed to just below 45 percent, helped by flows bypassing the Strait of Hormuz and by military escorts through it, while refined product and LPG exports remain nearly 60 percent, or 3.7 million barrels a day, below February.
North Sea Dated averaged 91.00 dollars a barrel in August, 7.61 higher on the month, then reached 113.48 dollars on 9 September. Brent futures traded at 105 dollars at the time the agency wrote, 45 percent above pre-war levels. US diesel passed 200 dollars a barrel in early September, 94 percent above pre-war, in a fuel the agency says is nearly 30 percent of global demand.
Why it matters: Two agencies read the same market within 24 hours and disagreed about whether demand is growing or shrinking. That is not a difference of degree. The case for a contraction rests on demand destruction in middle distillates and petrochemical feedstocks, which is where the diesel figures point, and on Gulf supply not expected back until 2027. For a Gulf reader the table matters more than the forecast: Saudi Arabia at 49.3 percent of assessed capacity and a collective shortfall of 5.66 million barrels a day are the measure of what the region is not currently able to sell.
Outlook: The next report is due on 14 October, and the one from OPEC will follow within days of it. Two numbers decide whether the gap narrows. The first is Gulf product exports, at nearly 60 percent below February, because that is where the demand destruction the agency describes is being manufactured. The second is the inventory draw, which at 2.8 million barrels a day since February cannot continue indefinitely and is currently doing the work that neither supply nor demand is doing.
Sources: International Energy Agency, OPEC.
