IEA Reveals Impact of Iran War: Oil Supply Disrupted, Demand Shrinks

The conflict in the Middle East, particularly the Iran war, has significantly shaken the global oil market.

The Oil Market Report released by the International Energy Agency (IEA) on 14 April 2026 notes that disruptions to energy supply and distribution have drastically altered market projections, from demand and supply to world oil prices.

“The Iran war has truly changed the global outlook on oil consumption,” the IEA states in its report, quoted on Thursday (16/4/2026).

The IEA estimates that global oil demand will fall by 80,000 barrels per day (bpd) throughout 2026.

This projection reverses the previous estimate, which still indicated growth of 730,000 bpd.

The decline is driven by the direct impact of the conflict on global energy distribution as well as rising oil prices.

On a monthly basis, the decline is even sharper. In March 2026, global oil demand was recorded to have fallen by 800,000 bpd year-on-year, and is expected to deepen in April with a contraction of 2.3 million bpd.

The IEA assesses that this decline will peak in the second quarter of 2026, with a contraction of 1.5 million bpd, described as the sharpest drop since Covid-19 slashed fuel oil consumption.

The greatest impact is seen in the petrochemical sector, particularly in demand for raw materials such as LPG, ethane, and naphtha.

The IEA report states that petrochemical raw materials are showing the most direct impact of the war, with consumption of LPG/ethane and naphtha dropping by 1.8 million bpd in April 2026.

This decline occurs because the petrochemical sector consists of major industrial players that are highly sensitive to prices and dependent on global trade.

Additionally, damage to production facilities and logistical disruptions exacerbate the pressure on demand.