Oil is declining. The Energy Agency talks about low demand and supply
Global oil prices fell on Wednesday, May 13, after a rise of more than 8% over the past days, in light of the continued stalled of diplomatic efforts to end the US-Israel war on Iran, and the increasing pressure on Iranian exports as a result of the US naval blockade imposed on the Strait of Hormuz.
The price of Brent crude fell to about $106 per barrel, while the West Texas Intermediate crude fell to around $101, according to international market data.
The Ministry of Energy expects a contraction in global demand
The International Energy Agency (IEA) predicted on Wednesday in its monthly report that global oil demand will shrink by 420,000 barrels per day (bpd) during 2026, reaching 104 million bpd, 1.3 million bpd less than its pre-war forecast, noting that the petrochemical and aviation sectors are currently the hardest hit, and that the second quarter of the year will see the biggest drop in demand.
The agency also predicted that global supplies are likely to decline by an average of 3.9 million barrels per day during 2026, to stabilize at 102.2 million barrels per day, assuming a gradual resumption of oil flows through the Strait of Hormuz starting next June.
It said global supply fell by 1.8 million barrels per day in April, bringing total losses since February to 12.8 million barrels per day.
US data: Gasoline rises to highest levels since 2022
No ocean-going tankers have crossed Kharj Island, Iran's main oil export hub, in recent days, in the first extended pause since the war began more than a decade ago, Reuters reported.
It comes as the United States has imposed a tight naval blockade on Iranian ports since mid-April, choking oil, gas and fuel flows through Hormuz, one of the world's most important energy arteries.
Recent U.S. data showed that the conflict is re-igniting inflation, while gasoline prices have jumped to the highest level since 2022, putting political pressure on the U.S. administration ahead of the midterm elections.
Global Supply Chain Disruption
The actual closure of the Strait of Hormuz since the start of the war has led to chaos in energy supply chains, especially in Asian countries that rely heavily on Middle Eastern oil, such as Japan, which has resorted to buying Mexican oil for the first time since 2023.
Vietnam's state oil company has also asked the United States to allow a giant tanker loaded with oil to pass through the naval blockade, stressing that the shipment is "vital to the Vietnamese economy."
A day before the war began on Feb. 28, Brent crude was trading at $72 per barrel, while WTI was trading at $66, and today, Brent futures for June delivery are at $106 and West Texas at $101, reflecting the extent of the disruption the war has caused in global energy markets.