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The International Energy Agency (IEA) said it sees global oil demand falling by 420,000 barrels per day (bpd) in 2026 to 104 million bpd, while global oil supply is projected to decline by 3.9 million bpd to 102.2 million bpd.
The agency said the steepest decline in oil demand is expected during the April-June quarter, with demand seen falling by 2.45 million bpd. It added that global oil supply fell by 1.8 million bpd in April.
According to the IEA, the closure of the Strait of Hormuz is depleting global oil stocks at a record pace. However, it noted that the current supply-demand gap remains significantly small as the market was already in surplus.
The agency said high oil prices and a worsening global economic scenario are expected to weigh on oil consumption. It also warned that supply recovery would be slow even if flows through the Strait of Hormuz resume in the third quarter (Q3).
Russia's oil output down 460,000 bpd
In another development, Russia's crude oil production declined by 460,000 barrels per day in April from the same month a year ago to around 8.8 million bpd, IEA said, as Ukraine ramped up drone attacks on energy targets.
Crude exports, meanwhile, increased by 250,000 bpd from March to 4.9 million bpd, as disruptions in Gulf supplies caused by the Iran war attracted new buyers for Russian oil, Reuters reported.
Since March, Ukraine has unleashed waves of drone strikes on some of Russia's biggest oil ports and attacked refineries in an effort to drain Moscow's war economy.
Russian oil output peaked in the late 1980s but cratered after the 1991 collapse of the Soviet Union due to a lack of investment. It recovered in the 2000s and 2010s reaching a post-Soviet peak in 2019 just before the COVID-19 pandemic, according to PTI.
The IEA also said Russia's oil product exports declined in April by 340,000 bpd from March to 2.2 million bpd, the lowest level in the Paris-based agency's records.
Total oil and fuel exports recovering
"Russian total exports recovered in the second half of April, but never returned to the three-week average preceding the attacks on Baltic ports – covering the period between the start of the Middle East conflict and the Baltic disruptions – that peaked at 7.7 million bpd," it said.
The IEA said the rebound was driven by higher seaborne shipments via the Baltic Sea - an increase of 190,000 bpd from March - and a partial resumption of Druzhba pipeline flows to Hungary and Slovakia, which reached 60,000 bpd in the final week of April, PTI report stated.
Since the onset of the Iran war, Russia has attracted new buyers for its Urals grade, with exports to Egypt averaging 200,000 bpd in April with a peak of 380,000 bpd in the week of April 20.
"With Urals exports at 1.9 million bpd, Russia is approaching pre‑Ukrainian war levels, suggesting loadings close to capacity," the IEA said. (With Agency Inputs)
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