Incheon:World oil demand is projected to decrease by 2.7 million barrels per day (mb/d) in 2026, reaching 102.3 mb/d, before rebounding by 2 mb/d in 2027, as detailed in the IEA Oil Market Report (OMR) for November 2026.
According to Emirates News Agency, the decline in oil demand is expected to ease to 2.7 mb/d in the fourth quarter of 2026, down from an average decrease of 4.4 mb/d over the second and third quarters of the same year. The report indicates that LPG/ethane and naphtha will contribute to approximately 80% of the demand increase next year, as supply chains normalize, while transport fuels will see only modest gains due to high prices accelerating the electrification and fuel efficiency of the global car fleet.
Global oil demand continues to be impacted by ongoing disruptions to exports of refined products and LPG from the Gulf, remaining at about half of pre-war levels, alongside high fuel prices. The contraction pace is anticipated to narrow to a year-on-year decline of 2.7 mb/d in the fourth quarter of 2026, compared to declines of 5 mb/d in the second quarter and 3.8 mb/d in the third quarter, leading to an annual average fall of 2.7 mb/d.
The shortfall compared to 2025 levels is expected to ease further before shifting to growth around March of the following year, resulting in an overall increase of 2 mb/d in 2027. Petrochemical feedstocks, which were most affected by the war, are predicted to account for nearly 80% of the gains in 2027, while high prices, electrification, and fuel efficiency in the global vehicle fleet are likely to dampen the rebound in road fuel demand.
The report notes that despite ongoing attacks on energy infrastructure and tankers, global oil supply increased by a further 2.3 mb/d to 105.4 mb/d in October, supported by significant Gulf exports. This increase follows a rise of 3 mb/d in September. The higher flows have led to a sharp upward revision of fourth-quarter 2026 supply, while 2027 projections have been lowered due to constrained Iranian shipments. After a 4.8 mb/d decline in 2026, oil supply is expected to rebound by 6.6 mb/d, reaching an average of 108.1 mb/d in 2027.