**IEA Issues Warning on Global Oil Demand Decline Amid US-Iran Conflict**
The International Energy Agency (IEA) has issued a stark warning regarding global oil demand, indicating that it is poised to experience its first annual decline since the onset of the Covid-19 pandemic. This downturn is largely attributed to the ongoing conflict between the United States and Iran, which has significantly disrupted oil production and exports in the Middle East.
The conflict escalated following a US-Israeli bombing campaign against Iran in late February, which has led to a substantial reduction in oil output from the Gulf region. As a result, the IEA has noted that member countries have initiated the largest emergency stock release in history to mitigate the impact of these disruptions. Although oil exports have begun to recover gradually, production levels and inventories remain below what they were prior to the conflict.
The IEA's latest Oil Market Report, released on Friday, highlights that global oil demand is projected to decline by approximately 1 million barrels per day year-on-year by 2026. The report emphasizes that this contraction is uneven across different products and regions, primarily due to the closure of the Strait of Hormuz, a critical passage for crude and fuel exports from the Persian Gulf. The agency has underscored the importance of achieving a lasting peace agreement in the region to stabilize oil markets, as ongoing tensions continue to pose risks to production and exports.
Recent military actions have further exacerbated the situation. The United States has conducted strikes against Iranian targets in response to alleged attacks on oil tankers in the Strait of Hormuz. While US military officials have accused Iran of "unwarranted aggression," Iranian representatives contend that one of the attacked tankers failed to heed repeated warnings, asserting that all vessels must secure prior authorization to transit the strait.
Toril Bosoni, the IEA's head of oil industry and markets, expressed her concerns about the current state of the oil market, describing it as "very uncertain and unstable." She cautioned that a swift recovery is unlikely, noting that stronger production from regions outside the Middle East, combined with weaker-than-anticipated demand, could result in a surplus in the market later this year and into 2027. This potential surplus could provide an opportunity for countries to replenish their oil inventories.
The IEA's warning comes at a time when the global economy is still grappling with the aftereffects of the pandemic, and rising oil prices are further straining economic activity. The agency's report serves as a reminder of the fragile state of the oil market and the far-reaching implications of geopolitical conflicts on energy supplies.
As the situation develops, the IEA will continue to monitor the impact of the US-Iran conflict on oil production and demand, with a focus on the potential for stabilization in the region and its effects on global oil markets.