The global oil market is facing a sudden and sharp shift. What looked like a steady recovery just weeks ago has now been disrupted, as tensions in the Middle East begin to affect both supply and demand.
The International Energy Agency (IEA) has revised its outlook, warning that the ongoing conflict is starting to weigh heavily on oil flows and the wider global economy, reported Reuters.
The IEA now sees global oil demand falling by 80,000 barrels per day in 2026, compared with a projected year-on-year rise of 640,000 bpd in its previous monthly report.
“Demand destruction will spread as scarcity and higher prices persist,” the IEA said.
It also said that the biggest drop in oil consumption so far has been seen in the Middle East and the Asia-Pacific region.
The impact is even more severe on the supply side.
The IEA now forecasts that global oil supply will fall by 1.5 million barrels per day this year. This is a sharp reversal from last month’s estimate, which had pointed to an increase of 1.1 million barrels per day.
The sudden change reflects the scale of disruption caused by the ongoing conflict.
According to the IEA, attacks on energy infrastructure in the Middle East, along with Iran’s effective closure of the Strait of Hormuz, have led to an unprecedented situation.
The agency described it as the largest oil supply disruption in history.
Around 10.1 million barrels per day of supply were lost in March alone, highlighting the severity of the crisis.
With both supply and demand under pressure, the outlook for the oil market has become far more uncertain.
Higher prices, supply shortages and weaker demand are now all playing out at the same time — a combination that could continue to affect global markets in the months ahead.