Escalation in the Middle East threatens the stability of the global oil market
Despite the partial recovery of exports through the Strait of Hormuz, the escalation of the conflict in the Middle East poses risks to the stability of the oil market. It is forecasted that global oil demand in 2026 will fall by 1 million barrels per day for the first time since 2020 due to the war with Iran.
The International Energy Agency (IEA) reports that in June, global oil production rose to 98.8 million barrels per day, thanks to the recovery of shipping through the Strait of Hormuz. However, despite the increase in supply, the oil product market remains tense, as the conflict between the US and Iran continues with renewed intensity, leading to attacks on vessels in the region.
The forecast for global oil demand predicts its further decline in 2026, but in 2027, an increase of 2 million barrels per day is expected. The agency emphasizes that a rapid and linear market recovery is unlikely without long-term peace in the region. Hostilities can disrupt the fragile supply balance at any moment, which could significantly affect global prices.
The head of the IEA’s oil division, Toril Bosoni, noted that the situation is very uncertain and unstable, but due to increased production in other countries and reduced demand, a return to surplus is possible by the end of the year.
The United States has expressed its readiness for “technical talks” with Iran, despite the recent military escalations. President Trump called Iran’s attacks “acts of terrorism,” emphasizing the urgency of restoring peace to stabilize the oil market.
| Year | Global oil demand, million barrels/day |
|---|---|
| 2020 | 98 |
| 2026 (forecast) | 97 |
| 2027 (forecast) | 99 |
