Oil demand will remain weak into 2026, but the petrochemicals sector will be the key driver as weak macroeconomic conditions persist, according to the International Energy Agency (IEA) on Tuesday.
Demand expectations remain well below the historical trend, the IEA monthly Oil Market Report for October said, with transport electrification weighing on consumption trends.
“Despite recent sluggish growth, the petrochemical sector will reassume its position in the driving seat of oil demand growth, as subpar economic conditions, increasing vehicle efficiencies and strong EV [electric vehicle] sales make for strong headwinds for road transport fuels,” the IEA said.
Oil demand is forecast to gain around 700,000 barrels/day for the rest of 2025 and 2026, which the IEA said was well below the historical trend, despite rising 750,000 barrels/day in the third quarter. This uptick was driven by petrochemicals feedstocks rebounding, as tariffs in the second quarter suppressed oil rates to 420,000 barrels/day.
Supply grew by 760,000 barrels/day month on month, to 108 million barrels/day in September, led by OPEC+ production in the Middle East.
Supply is forecast to outstrip demand, increasing by three million barrels/day to 106.1 million barrels/day for 2025, and rising by 2.4 million barrels/day in 2026.
Gains of 1.6 million barrels/day are expected from non-OPEC+ countries this year, and 1.2 million barrels/day the following year, led by the US, Brazil, Canada, Guyana and Argentina.
OPEC+ is forecast to add 1.4 million barrels/day in 2025 and 1.2 million barrels/day in 2026 under the current production agreement.
Global crude throughput is expected to fall to a seasonal low of 81.6 million barrels/day in October, nearly 4 million barrels/day below July’s record levels, as refinery maintenance and escalating attacks on Russian infrastructure curb activity.
Refinery runs are forecast to rise by 600,000 barrels/day in 2025 and 460,000 barrels/day in 2026, reaching 83.5 million barrels/day and 84 million barrels/day, respectively.
Refining margins rose across all regions in September, led by stronger diesel and jet fuel cracks following disruptions to Russian refining and export flows.
“Persistent attacks on Russian energy infrastructure have cut Russian crude processing by an estimated 500 kb/d, resulting in domestic fuel shortages and lower product exports,” the IEA stated.