Middle East Oil Supplies Disrupted, Global Stocks Continue to Decline

Several governments, especially in Asia, have introduced fuel use restrictions and emergency conservation policies. Elsewhere, product shortages and higher prices have dampened consumption.

First drop in oil demand since the Covid-19 pandemic

These pressures have led to a significant decline in global oil consumption.

The IEA reports that global oil demand fell by 5.3 million bpd in Q2 2026 compared to the same period last year.

This marks the first quarterly decline in oil demand since the Covid-19 pandemic.

Gasoil products contributed significantly to this drop, with consumption falling 1.2 million bpd year-on-year. At the same time, combined deliveries of naphtha, LPG, and ethane decreased by 1.8 million bpd.

For all of 2026, the IEA now forecasts a contraction in global oil demand of 2.5 million bpd.

The Middle East and Asia are expected to account for roughly 80 percent of the decline.

Oil stocks continue to dwindle

Despite increased supply from various sources and reduced demand, market buffers in the form of oil inventories continue to shrink.

The IEA notes that global oil stocks have fallen at an average rate of 2.8 million bpd over the past six months.

Current inventories are 507 million barrels lower than at the start of the conflict.

IEA member countries have also released more than 300 million barrels from emergency reserves as part of a collective action announced on March 11, 2026.

Stocks of crude outside OECD countries have decreased by 105 million barrels, with about 65 percent of that drop in Chinese tank inventories and the rest mainly in oil in transit.

These developments are tightening market buffers further.

"Global oil inventories have declined at a record pace of 2.8 million barrels per day over the past six months," the IEA said.

With stocks continuing to deplete, market attention is increasingly focused on the recovery of oil flows through the Strait of Hormuz and alternative routes.

The IEA emphasized that the rapid stock drawdown heightens the urgency of fully reopening the Strait of Hormuz and alternative shipping lanes.

The agency also warns that any further disruptions hindering full production and export recovery could significantly impact oil markets globally.