Hormuz closure squeezes global economy as oil demand destruction intensifies, IEA says

World oil demand is set to fall further than previously expected this year, the International Energy Agency said Wednesday, as the impact of the closure of the Strait of Hormuz deepens.

The IEA forecast demand will drop by 1.6 million barrels a day in 2026. That's 510,000 barrels a day more than its last monthly prediction in July.

High fuel prices will continue to weigh on consumption, the institution said, though demand is expected to pick up through the year and return to growth in the final quarter.

The situation in the Strait of Hormuz remains mired in confusion, with an agreement between Washington and Tehran to open the vital waterway failing to emerge as both sides continue to publicly issue demands.

"Renewed hostilities and maritime disruptions" are undermining efforts to boost global oil supply, the IEA said Wednesday, which remained 6.3 million barrels a day lower year-on-year in July.

That has driven volatility in crude prices. International benchmark Brent crude surpassed $100 a barrel last month, while also falling near $70 a barrel. It was last seen trading at just under $90 a barrel.