NEW YORK -- The International Energy Agency reports that global oil demand will fall this year for the first time since the 2020 COVID-19 peak.

Higher prices and uneven supply disruptions across regions are expected to cut demand by roughly 1 million barrels daily in 2026, according to the agency's analysis.

Supply issues stemmed from the conflict between the U.S. and Iran, which stranded oil tankers in the Persian Gulf for over three months and blocked safe passage through the Strait of Hormuz.

Jim Burkhard, vice president and head of crude oil research at S&P Global Energy, noted that the outlook for Hormuz remains more uncertain now than at the start of the conflict.

He added that Iran continues efforts to influence the strait while the U.S. has not fully resumed normal operations, making a return to pre-conflict conditions improbable.

Worldwide demand averaged 97.9 million barrels per day in May, a drop of 5.3 million barrels daily from the prior year, with Asia experiencing the steepest reductions due to its reliance on Middle Eastern supplies.

China recorded the largest decline at 1.5 million barrels per day, a 9 percent decrease, the report indicated.

The United States stood out as demand for gasoline rose in the second quarter of 2026 even though pump prices climbed about 50 percent above pre-conflict levels in May.

China sharply reduced purchases from global markets as prices climbed in the spring, cutting its intake by nearly 6 million barrels per day, Burkhard explained.

Burkhard quoted Chinese officials as deciding that high prices and the crisis allowed them to draw on large inventories and halve crude oil purchases.

Daniel Sternoff, senior fellow at the Center on Global Energy Policy at Columbia University, observed that China paused additions to its strategic petroleum reserve, which had been receiving nearly 1 million barrels daily.

The situation also sped up China's shift away from road fuels as electric vehicle adoption increased, Sternoff said, projecting demand losses of 500,000 to 600,000 barrels per day for gasoline and diesel.

A tentative ceasefire in June allowed some vessels to transit the Strait of Hormuz, easing supply constraints and lowering prices.

Subsequent tensions between the U.S. and Iran earlier this month did not trigger sharp price increases.

Burkhard described the current situation as a gray-zone conflict that causes only modest price swings of a few dollars rather than major market shocks like those seen in early March.

Experts noted that fewer buyers were available to absorb newly available supply, with China cutting purchases, Russian refineries damaged by Ukrainian drone strikes, and Middle Eastern facilities still affected by the conflict.

These factors kept prices for gasoline, diesel, and refined products elevated longer than crude prices, Burkhard said, as excess crude supply met reduced demand.

Gasoline prices in the U.S. averaged above $4.50 per gallon in May, up more than 50 percent since the conflict began, per AAA figures, yet consumption still increased during the second quarter.

Sternoff attributed this resilience to the declining share of household income spent on gasoline over recent years and the return of many workers to offices.

He observed that higher-income households may complain about prices but rarely reduce driving in response to such changes.