IEA Cuts 2026 Oil Demand Forecast Amid Rising Prices

The International Energy Agency lowered its global oil demand outlook for 2026 on Wednesday, projecting a decline of 2.6 million barrels a day on average as elevated fuel prices weigh on consumption. This revised estimate marks a steeper drop than the agency's forecast from last month, which had projected a 2.5 million barrel a day decrease for the year. The agency expects the ongoing quarter to see a 2.5 million barrel a day reduction in oil consumption, with diesel likely to account for a quarter of the projected decline. A partial recovery in demand is not expected until 2027.

Energy stocks moved higher late Wednesday afternoon despite the bearish demand signal, with the NYSE Energy Sector Index rising 0.3% and the State Street Energy Select Sector SPDR ETF (XLE) adding 0.6%. Front-month West Texas Intermediate crude oil rose 1.1% to $95.14 a barrel, while the global benchmark Brent crude contract advanced 0.4% to $106.07 a barrel. Conversely, the Philadelphia Oil Service Sector Index fell 1.7%, and the Dow Jones US Utilities Index shed 0.4%. Henry Hub natural gas futures dropped 3.3% to $3.17 per 1 million BTU.

Geopolitical tensions continued to influence market sentiment as Reuters reported that the Iran-aligned militant group Houthis vowed to press on with attacks on airports and oil facilities in Saudi Arabia. This statement came a day after a strike that sources said caused extensive damage to the headquarters of Saudi Aramco.

In corporate news, Greenland Energy (GLND) shares surged past 76% following a post by President Donald Trump on his Truth Social platform indicating that significant exploration for oil, gas, and minerals is about to start in Greenland.

American Electric Power (AEP) shares rose 0.4% after the company announced it will invest about $4 billion in a 702-megawatt fuel cell generation project near Cheyenne, Wyoming. The investment is part of a 20-year power purchase agreement with Alphabet's Google (GOOGL).

Petrobras (PBR) shares gained 1.7% after the company disclosed it will receive $859 million following the signing of cost and volume balancing agreements with its partners in the BM-S-11A Consortium. The partners include Shell (SHEL), TotalEnergies (TTE), and Petrogal, in connection with the Berbigao and Sururu shared reservoirs.

Equinor (EQNR) shares added 0.6% after the company announced an oil and gas discovery at an exploration well near the Oseberg field off the southwestern coast of Norway. Equinor made the discovery alongside its partners TotalEnergies and Petoro.