The International Energy Agency (IEA) on Wednesday slashed its forecast for global oil demand this year, with supplies still limited by the disruption of shipping through the Strait of Hormuz and high prices deterring buyers. Demand is expected to fall by 1.6 million barrels per day, compared with the forecast drop of one million barrels in its previous monthly report in July. This has led to damage to oil infrastructure in several Gulf countries and some oil supply routes severely disrupted. Tehran also responded by effectively shutting down tanker and cargo traffic in the Strait of Hormuz, through which about a fifth of global oil supplies normally transit. “The current closure of the Strait of Hormuz and high fuel prices continue to weigh on oil consumption,” the Paris-based IEA said. The IEA called “sudden diplomatic turns”: only a handful of ships are allowed through, leading to volatile prices on global oil markets. The IEA said global supplies rose by 2.4 million barrels per day in July, to reach 101.5 million barrels per day, but that was still 6.3 million per day less than a year ago. But “renewed hostilities and maritime disturbances in July and early August undermined recovery efforts,” the agency said. Global supply is expected to fall by 4.3 million barrels per day on average this year, before recovering next year. On the demand side, the IEA projects a return to growth in the fourth quarter of this year.
