The International Energy Agency IEA has sharply cut its forecast for global oil demand this year, citing the continued closure of the Strait of Hormuz and elevated fuel prices as major factors discouraging consumption.

In its latest monthly report, the Paris-based agency said global oil demand is now expected to decline by 1.6 million barrels per day, compared with its previous forecast of a 1 million-barrel-per-day decline issued in July.

Oil prices have remained significantly above pre-war levels following the US and Israeli attacks on Iran in late February, which triggered a conflict that has damaged oil infrastructure across parts of the Gulf.

The IEA reported that global oil supplies increased by 2.4 million barrels per day in July, reaching 101.5 mb/d. However, supply remained 6.3 mb/d below the level recorded a year earlier. The agency warned that renewed fighting and maritime disruptions in July and early August had undermined efforts to restore production and supply.

It now forecasts that global oil supply will fall by an average of 4.3 mb/d this year before beginning to recover in 2027.

— CHANNELS