The IEA Had Already Reduced Its Oil Demand Forecast. It Has Done So Once More.

The International Energy Agency (IEA) said global oil demand is set to fall further than expected as key waterways through which a significant percentage of energy pass remain closed.

The agency now said it expects global demand to drop by 1.6 million barrels a day, a 510,000 increase compared to the July forecast.

"Annual contractions will nevertheless ease from 4.9 mb/d in 2Q26 to 2.8 mb/d in 3Q26, before returning to growth in the final quarter. Global oil demand is projected to expand by 2.4 mb/d in 2027," the report adds.

It went on to note that that global oil supply "rose by 2.4 mb/d to 101.5 mb/d in July, but remained 6.3 mb/d below year-ago levels, with 8.3 mb/d of Gulf output still shut in."

"Renewed hostilities and maritime disruptions in July and early August undermined the recovery efforts, reducing projected 3Q26 oil supply by 1.7 mb/d compared with last month's Report," the IEA added.

The agency also noted that global oil inventories kept decreasing, falling below 7.9 billion barrels in July for the first time since April last year.

"Although the market is projected to return to surplus towards the end of this year, risks remain substantial and the urgency of reopening the Strait has increased, as previously available inventory buffers are rapidly depleting," reads a passage of the report.

U.S. inventories in particular have been dropping as well. The Strategic Petroleum Reserve (SPR) fell to its lowest level in more than 40 years, according to data from the Department of Energy. It showed that the SPR stood below 300 million barrels last week, the lowest since January 1983.

It was at about 415 million barrels before the war with Iran bean in late February and has a maximum authorized capacity of 714 million barrels.

The Trump administration had ordered the release of 172 million barrels in March as the war continued and the Strait of Hormuz remained closed.

A spokesperson for the DoE told CNBC that the minimum amount needed to operate the SPR is 70 million barrels.

Traffic through the waterway is not expected to fully reopen any time soon as Washington and Tehran's positions remain far apart.

President Donald Trump signaled a shift to economic, rather than military pressure on the country.

"We are low-keying it," Trump told Axios on Sunday. "We are only semi-negotiating with them. We are just watching Iran with its huge inflation and the fact they have no money."

The president went on to say that the country is in "very bad shape," claiming that the situation will "work out." "It always works out. It's like a chess game," he said.