PARIS, Aug. 12 (Xinhua) -- The International Energy Agency (IEA) on Wednesday cut its forecast for global oil demand in 2026, citing the continued closure of the Strait of Hormuz and elevated fuel prices that are weighing on consumption.

Commercial vessels are seen in the Strait of Hormuz off Bandar Abbas, Iran, Tuesday, June 30, 2026. (Photo: AP)

In its Oil Market Report for August, the IEA forecast global oil demand to decline by 1.6 million barrels per day (mb/d) in 2026, 510,000 barrels per day more than its July estimate.

Global oil supply rose by 2.4 mb/d to 101.5 mb/d in July, but remained 6.3 mb/d below year-earlier levels. Renewed hostilities and maritime disruptions in July and early August undermined efforts to restore supply, prompting the IEA to cut its forecast for oil supply in the third quarter by 1.7 mb/d from its previous report.

Gulf oil production increased by 2.5 mb/d in July to 23.9 mb/d, following a 3.7 mb/d increase in June, but remained 8.3 mb/d below pre-war levels. With an agreement enabling the reopening of the Strait of Hormuz and unhindered transit through the Bab el-Mandeb Strait still elusive, the IEA lowered its supply forecasts for the rest of the year. Global oil supply is now expected to fall by 4.3 mb/d in 2026 to 102 mb/d, the report said.

Benchmark crude prices surged to a two-month high in July as the recovery in oil supplies from the Gulf reversed course following the breakdown of the mid-June Iran-U.S. ceasefire agreement. Oil prices traded within an unusually wide range of 40 U.S. dollars per barrel in July, driven by sudden shifts in diplomatic expectations, it said.

The IEA said elevated fuel prices were putting further downward pressure on oil consumption. Global oil demand is projected to expand by 2.4 mb/d in 2027.