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Informist, Wednesday, Jun. 17, 2026

--IEA: See global oil demand down by 1.1 mln bpd on year in 2026

--CONTEXT: International Energy Agency releases June oil market report

--IEA: See global oil supply down by 3.9 mln bpd in 2026 to 102.4 mln bpd

--IEA: See refinery crude throughput down by 2 mln bpd in 2026 to 82 mln bpd

--IEA: Fall in global observed inventories accelerated in May to 143 mln bbl

MUMBAI – The International Energy Agency has forecast global oil demand to decline by 1.1 million barrels per day in 2026 driven by lower imports by China and Japan, and a fall in end-used demand. China and Japan imported about 6 million barrels per day less oil than a year ago, a decline of around 40%. As a result, refineries in China, West Asia, Eurasia and other Asian countries processed much less crude oil, the agency said.

Despite the significant reductions in demand for crude oil and refined products, the buffer in the system continue to erode at a record pace, according to the report. Global observed oil stocks have declined by 3.8 million barrels per day on average since the start of the war, with a sizeable draw of 143 million barrels, it said. Further declines in the coming months could still take global oil stocks to historic lows before the market balance shifts to surplus towards the end of the year.

Meanwhile, global oil supply is expected to fall by 3.9 million barrels per day in 2026 to 102.4 million barrels per day, the Paris-based intergovernmental organisation said. Supply is seen to then rebound by 8 million barrels per day in 2027, it said.  

In May, output declined to 94.5 million barrels per day, down 600,000 barrels per day on month and 13.6 million barrels per day below pre-conflict levels, the agency said. While the US-Iran interim agreement paves the way for a rebound in exports from West Asia, operational and political constraints, including prolonged demining and unresolved transit arrangements, pose downside risk to supply, it said.

An interim agreement between the US and Iran to end the war may lead to the reopening of the Strait of Hormuz. While details of the deal that is scheduled to be signed on Friday in Switzerland are yet to be clarified, and several issues remain outstanding, it is an encouraging step forward, it said. 

The energy watchdog expects refinery crude throughput to fall by 2 million barrels per day in 2026 to 82 million barrels per day, led by a 4.7 million barrels per day on year decline in 2Q26. Even though there has been a temporary peace agreement that eased some disruptions, the outlook for refinery operations in 2026 has been lowered further.

Forecast for refinery runs in 2026 has been cut by 370,000 barrels per day compared with previous estimates, mainly because refiners in China, West Asia, Eurasia and non-Organisation for Economic Co-operation and Development Asian countries are expected to process much less crude oil in the third quarter of 2026. However, refinery activity is expected to recover in 2027, rising by 3.1 million barrels per day as crude oil supplies return to normal levels, the agency said. 

The decline in global observed inventories accelerated in May to 143 million barrels from 74 million barrels in April. "OECD government inventories fell by 163 mb (-1.8 mb/d) over the same period to their lowest level since December 1990 as the pace of emergency stock releases accelerated," the agency said. 

North Sea Dated crude oil prices collapsed by more than $40 per barrel to around $82 per barrel from May to mid-June, as oil demand faltered and on building speculation that the US and Iran were getting closer to agreeing the terms of a peace deal, it said. "Prices had already retreated from recent highs as market tensions eased on a surge in Gulf exports at the start of June, an acceleration in IEA government stock releases and weaker demand," it said.

"Investor exchange holdings slumped in parallel, as positive price momentum reversed sharply and traders reduced positions in the face of extreme price volatility and higher exchange margins," according to the energy agency.  End

US$1 = INR 94.52

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Taniva Singha Roy

Edited by Akul Nishant Akhoury

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