New Delhi, July 11: The International Energy Agency (IEA) has reported a notable recovery in global crude oil demand. In May, oil demand fell to 97.9 million barrels per day, down by 5.3 million barrels per day compared to the previous year. However, the agency projects that by October, global oil demand will exceed 8 million barrels per day above May’s low, surpassing levels seen in 2025 for the first time since February.
According to the IEA’s latest Oil Market Report, increased travel during the summer is expected to boost fuel demand. Additionally, the return of previously suppressed demand will further enhance oil consumption.
Despite this positive outlook, the agency anticipates a potential decline of 1 million barrels per day in global oil demand in 2026, followed by an expected increase of 2 million barrels per day in 2027.
The IEA warns that by the end of the year, global oil supply may outstrip demand. This forecast hinges on whether oil tanker movements through the Strait of Hormuz gradually normalize. If they do, oil-producing nations could ramp up production, allowing refineries in the Middle East and other regions to resume normal petroleum product supply.
The agency noted that recent gunfire in the Gulf region underscores the challenges of restoring normalcy in the oil market without a lasting peace agreement. The IEA emphasized that achieving stable crude oil markets is heavily reliant on enduring peace in the Gulf.
The report indicated that global oil inventories rose by 21 million barrels in June, marking the first increase in four months. This rise was attributed to an increase in oil at sea, compensating for a decrease in onshore stocks.
Following a drop of 73 million barrels in May, OECD countries saw an additional reduction of 62 million barrels in total oil inventories in June. Approximately 44 million barrels of this decline were due to oil released from government reserves. Non-OECD countries also experienced a decrease of 37 million barrels, with China alone accounting for a reduction of 41 million barrels.
The IEA reported a continued decline in benchmark crude oil prices in June, erasing gains made during the conflict. Increased tanker movements from the Gulf and fears of additional supply in the market exerted downward pressure on prices.
According to the report, the price of North Sea dated crude fell by $22 per barrel over the month, settling at approximately $68 per barrel. However, following a ceasefire violation on July 7-8, prices surged again, trading at around $77 per barrel at the time of the report.
The IEA also highlighted that while crude oil supply has increased, refinery operations and the supply of petroleum products are still normalizing at a slow pace.
In June, exports of refined petroleum products and LPG from Gulf countries remained less than half of pre-war levels, while crude oil exports reached nearly three-quarters of February’s levels.
The report indicated that major exporting refineries in the Gulf have not yet fully resumed loading, suggesting ongoing operational disruptions. Additionally, increased attacks by Ukraine on Russian refineries and export infrastructure have added pressure to the global petroleum product market, impacting both exports and domestic fuel supply.
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