International Energy Agency analysts lowered their projection for world oil demand in the second half of 2026 by about 550,000 barrels per day, citing persistent price pressure from the ongoing closure of the Strait of Hormuz. The agency said the tighter supply chain and higher pump prices are prompting consumers and businesses to cut back on fuel consumption.
Global demand outlook
The agency's latest oil market report notes that the Strait, a narrow chokepoint for roughly a fifth of global oil shipments, remains largely blocked as Iran refuses to allow trans‑it traffic until its demands are met. Crude output from the Gulf region is still down by more than eight hundred thousand barrels per day, while global inventories fell sharply in July.
West Texas Intermediate, the benchmark for U.S. crude, was trading around US$81 per barrel at the time of the report, a modest dip from the previous week but still well above pre‑conflict levels. The IEA warned that with inventory buffers eroding, the risk of further price spikes remains high.
Implications for Canada
Canadian motorists have already felt the impact. The Canadian Automobile Association reported the national average for regular‑grade gasoline at about C$1.68 per litre, up from C$1.53 a week earlier and nearly thirty‑five cents higher than a year ago.
The Canadian government temporarily suspended the federal fuel excise tax in April, providing short‑term relief. That measure is set to expire next month, meaning consumers could see another rise in pump prices if the tax is reinstated while global oil markets stay tight.
Although the IEA expects demand to fall by 1.6 million barrels per day in 2026, it projects a rebound of roughly 2.4 million barrels per day in 2027 as economies adjust and the Strait potentially reopens.
For Canadian energy firms and policymakers, the outlook underscores the importance of diversifying supply routes and maintaining strategic reserves. A prolonged disruption in the Strait could pressure domestic fuel costs and test the resilience of Canada's own energy infrastructure.
Based on reporting by Global News.