The Paris-based IEA lowered its estimate for this year's demand drop by another 940,000 barrels per day, putting total 2024 contraction at 2.5 million barrels per day. That would be the steepest annual average decline since 2020, when the Covid shock froze large parts of the global economy. The agency cautioned that as the Iran war persists and consumers adjust to tighter availability, consumption could slip further in the near term.
On supply, the IEA cut its outlook by 1.3 million barrels per day, taking the expected annual loss to 5.7 million barrels per day. It also shifted a hoped-for recovery into next year and now expects the return of a sustained surplus to be delayed until 2027.
Brent crude climbed back above $100 during the week, a level not seen since July, and hovered near $104 on Friday.
The agency says the conflict is hitting physical flows more than end demand, widening the gap between the two. Its latest figures point to a global average deficit around 1.7 million barrels per day this year, compared with 1.3 million per day in last month's assessment. Instead of a slight fourth quarter stock build it previously anticipated, the IEA now sees inventories continuing to fall. It had said in August the market could flip to surplus near year end.
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"Global oil inventories have been drawing at record rates," said the energy adviser to major economies. "With supplies still constrained, and commercial inventory buffers rapidly depleting, further demand reductions may be required in the coming months to close the gap." Between February and August, stocks fell at a pace of 2.8 million barrels per day. Data in the report also show world supply trailing demand this year by roughly 1.75 million barrels per day. The IEA has characterized the situation as a record-breaking supply disruption.
Looking ahead, the agency expects the blow to 2026 demand to be on par with the four biggest shocks of the past six decades, with the harshest effects hitting middle distillates such as diesel and petrochemical feedstocks in Asia. Translation for your wallet: tight barrels, shrinking stockpiles, and higher prices are the combo to watch as you think about how much energy sensitivity you want in your broader plan.
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