The Iran war has not only disrupted the supply of oil and gas but has also had impacts on the energy demand side. According to the International Energy Agency's analysis, global oil and gas consumption has experienced a significant decline due to disruptions in production, transportation, and price spikes. It is predicted that global oil demand will decrease by 2.5 million barrels per day in 2026, which is a larger drop than the previous estimate of 940,000 barrels per day.
The Impact of Economic Changes on Energy Demand
These changes are significant because energy shocks typically manifest first on the supply side. However, if supply constraints and price increases persist for an extended period, economies adapt to the new conditions. Expected changes include reduced travel, fuel switching, increased use of fuel-efficient and electric vehicles, and the substitution of gas with other resources in power plants.
The International Energy Agency's analysis published on September 24 indicates that the Iran war has led to a reduction in global oil and gas consumption. This analysis predicts that global oil demand in 2026 will decrease by about 2.5% compared to the previous year. This decline is not indicative of a typical cyclical drop and is specifically related to the current market conditions.
Gas and Oil Market Trends
The gas market has also been significantly impacted by the crisis. It is predicted that global natural gas demand will decrease by about 0.5% in 2026, marking the third annual decline in this decade. In Asia, gas demand has decreased by about 0.5% in the first half of the year, and in China, gas consumption fell by nearly 4% from March to June.
Rising gas prices and changes in fuel composition in the electricity and industrial sectors are the main factors behind this decline. Governments and companies are reassessing their consumption patterns, fuel mix, and energy security strategies due to rising costs and changes in supply.
Ultimately, the impacts of the Iran war on the global energy market are not limited to reduced consumption but could also lead to permanent changes in the behavior of consumers and producers. The Strait of Hormuz plays a crucial role in these developments as a vital route for global energy trade.
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