Global oil demand is falling, but US drivers keep buying more gas

Key Points:

• Global oil demand is expected to decline by about 1 million barrels per day in 2026, marking the first drop since the COVID-19 pandemic, driven by higher prices and supply disruptions linked to the U.S.-Iran conflict.
• Supply issues stem from the war between the U.S. and Iran, which stranded crude oil shipments in the Persian Gulf and created ongoing uncertainty around the Strait of Hormuz, a key oil transit route.
• China significantly reduced its oil consumption by nearly 6 million barrels per day, partly by halting additions to its strategic petroleum reserve and increasing electric vehicle use, contributing to the global demand decline.
• Despite gasoline prices rising over 50% in the U.S. since the war began, American gasoline consumption increased in the second quarter of 2026, likely due to lower relative household expenditure on fuel and a return to office work.
• Oil prices have remained relatively stable despite renewed U.S.-Iran tensions and military strikes, as increased crude supply met with reduced demand from China and damaged refineries in Russia and the Middle East.