PARIS, France / RankWire.AI / – World oil demand is forecast to fall by 2.7 million barrels per day in 2026, to 102.3 mb/d, before rebounding by 2 mb/d in 2027, the International Energy Agency said in its November Oil Market Report released on Friday, November 13. Disruptions to exports of refined products and liquefied petroleum gas from the Gulf, along with high fuel prices, continue to weigh on consumption.
Gulf exports of refined products and LPG remain at roughly half of prewar levels, the IEA said. The pace of the contraction is set to narrow to 2.7 mb/d year on year in the fourth quarter, compared with declines of 5 mb/d in the second quarter and 3.8 mb/d in the third. The shortfall versus 2025 levels is expected to keep easing before demand returns to growth around March. Demand fell most sharply in the middle of the year.
Petrochemicals to lead 2027 rebound
LPG, ethane and naphtha will account for around 80% of next year’s demand increase as supply chains normalize, the agency said. These petrochemical feedstocks were the products most affected by the war. Transport fuels will see only very modest gains, as high prices accelerate electrification and fuel efficiency across the global car fleet. That trend is expected to dampen the rebound in road fuel demand.
The IEA said its November supply and demand balances suggest the global oil market will return to a surplus in the fourth quarter, with a more substantial build in 2027. Reuters reported that the agency sees a fourth-quarter surplus of about 1.7 mb/d and a 2027 surplus of around 3.8 mb/d, slightly lower than the 3.94 mb/d estimated last month. Observed inventories rose 1.7 mb/d in October.
Supply climbs on Gulf exports
Global oil supply rose by 2.3 mb/d to 105.4 mb/d in October, following an increase of 3 mb/d in September, on higher Gulf exports despite ongoing attacks on energy infrastructure and tankers. The stronger flows supported a sharp upward revision to fourth-quarter supply. The agency lowered its 2027 supply estimate because of constrained Iranian shipments. OPEC+ members recently kept December output targets steady amid the risks.
After a decline of 4.8 mb/d in 2026, global oil supply is expected to rebound by 6.6 mb/d to an average of 108.1 mb/d in 2027, according to the report. The recovery reflects the gradual return of Gulf flows that were disrupted during the conflict. Oil prices had remained above $100 a barrel on Gulf supply losses earlier this year, before the recent improvement in exports. The IEA is based in Paris and advises member countries on energy policy.
The IEA warned that downside risks to its forecast persist, as attacks on shipping continue to undermine maritime security. The agency described maritime security as pivotal to a sustained recovery. Shipping through the Strait of Hormuz has been heavily disrupted since the war with Iran began in February. Any renewed escalation could again tighten supplies and delay the expected rebound in demand. The agency publishes its next monthly report in December.