The International Energy Agency (IEA), an independent organization based in Paris that provides energy policy advice to its 30 member countries, has updated its forecast for global oil demand. This update comes in response to ongoing tensions involving Iran, which have disrupted oil supplies and delayed the return to normal levels until 2027. In its latest monthly report, the IEA noted that stalled negotiations between the United States and Iran, along with renewed attacks in the region, are "hampering the normalisation of oil flows." The agency now predicts a larger decline in global oil consumption in 2026 than previously expected, with a projected drop of 2.5 million barrels per day compared to 2025, up from the earlier estimate of 1.6 million barrels. This revised forecast follows a recent surge in oil prices, which rose above $100 per barrel due to attacks on Iranian oil tankers and concerns about further supply disruptions in the Middle East. The volatility in the oil market has also impacted gas prices, with UK gas reaching a near four-year high, raising concerns about rising energy costs as winter approaches. The IEA has also warned that diesel prices are likely to rise significantly in the coming months due to refining challenges. According to the agency, while crude oil prices have increased, the most severe price pressures are being felt in refined products like diesel, which account for nearly 30% of global demand. In the U.S., diesel prices exceeded $200 per barrel in early September, a level 94% higher than before the conflict began, with similar trends observed in Europe and Asia. The IEA highlighted that oil supplies are likely to remain lower than initially expected, as the Strait of Hormuz, a critical shipping route for global oil, remains under Iranian control. Additionally, Iran-backed Houthi rebels in Yemen have made advances toward the Bab al-Mandeb Strait, a key passage for global shipping. These developments have pushed back the expected recovery of oil supplies from Middle East producers until 2027. The agency emphasized that global refining systems are operating at maximum capacity, with limited buffer capacity to handle disruptions. As a result, the IEA stressed the urgent need to resolve conflicts in the Middle East and the ongoing Russia-Ukraine war, now in its fifth year, to prevent further strain on the energy market and potential economic damage from reduced demand.