IEA lowers 2026 oil demand forecast on economic uncertainty, higher prices
In its February 2026 Oil Market Report, the International Energy Agency (IEA) projects global oil demand will increase by 850,000 b/d in 2026, up from 770,000 b/d in 2025, though the forecast has been slightly revised downward due to economic uncertainty and higher prices.
In January, benchmark crude oil prices surged by $10/bbl due to tightening spot crude oil markets caused by multiple supply disruptions and escalating geopolitical tensions between Iran and the US. In early February, prices retreated somewhat following reports of progress in de-escalation negotiations, but rebounded rapidly after the US advised ships to avoid Iranian waters when navigating the Strait of Hormuz.
As in 2025, non-OECD economies will account for the entire increase, with China remaining the largest contributor at roughly 200,000 b/d, albeit well below its average growth over the past decade. Demand gains are expected to be increasingly driven by petrochemical feedstocks, which will represent more than half of the increase, compared with only about one-third in 2025 when transport fuels dominated growth.
Global oil supply fell sharply by 1.2 million b/d in January to 106.6 million b/d, impacted by extreme winter weather that halted over 1 million b/d of oil production in North America. Combined with reduced supplies from Kazakhstan, Russia, and Venezuela due to production stoppages and export restrictions, this resulted in a significant drop in global oil supply. Despite the temporary disruption, supply is expected to rebound in the coming months. Global oil production is projected to increase by nearly 3.1 million b/d in 2025 and by another 2.4 million b/d in 2026, reaching 108.6 million b/d. Assuming OPEC+ maintains its current production agreement, growth from non-OPEC+ and OPEC+ producing countries will be roughly equivalent.
Supply losses were compounded by prolonged disruptions at Kazakhstan’s key export terminal, along with a power outage at the country’s largest oil field, tightening Atlantic Basin light crude availability.
Russian supply declined by about 350,000 b/d in January, as US pressure and broader EU sanctions disrupted flows. Indian imports of Russian crude fell to 1.1 million b/d in January, the lowest level since November 2022 and down from an average of 1.7 million b/d in 2025, while Russian deliveries into China climbed to a record high. Venezuelan crude output dropped by 210 kb/d month-on-month to 780,000 b/d, though production is expected to recover after Washington authorized a pathway for US-incorporated companies to export Venezuelan oil.
Global refinery crude throughputs eased from an all-time high of 86.3 million b/d in December to 85.7 million b/d in January, as seasonal maintenance and weaker margins weighed on activity. Crude runs are forecast to rise by an average 790,000 b/d in 2026 to 84.6 million b/d, led by non-OECD regions, compared with an increase of nearly 1 million b/d in 2025. Margins weakened further in January as December’s higher refinery runs reduced product market tightness.
Observed global oil inventories increased by 37 million bbl in December, bringing total 2025 stock builds to an exceptional 477 million bbl, the strongest annual increase since 2020. China accounted for a major share, with crude inventories rising by 111 million bbl, while oil on water expanded by 248 million bbl, including 72% linked to sanctioned barrels. OECD industry stocks rose by a counter-seasonal 3.9 million bbl in December, pushing them above the 5-year average for the first time since 2021. Preliminary data indicate global inventories surged by another 49 million bbl in January. Despite the overall surplus, relatively tight crude stocks in key pricing hubs have helped provide a floor under prices.