Oil demand shows first sign of contraction as emergency buffers fade: analysts in Oil & Companies News 04/06/2026 The global oil market is showing its first signs of demand destruction due to the Middle East war, as the effects of panic-buying and stock releases have started to fade, analysts said at the S&P Global Middle East Petroleum & Gas Conference June 2. The war has sent shockwaves through the oil market since February by shutting off some 14 million barrels/day of oil that once transited the Strait of Hormuz. Nevertheless, the Dated Brent crude benchmark has retreated 30% from its record high in April, and most major economies have so far avoided mass fuel shortages that would force demand lower. More than three months into the war, however, new data is beginning to show “significant drop-offs” in demand across key consuming economies, which will only accelerate as the conflict persists, said Toril Bosoni, head of oil research at the International Energy Agency. In May, the IEA slashed its global oil consumption forecasts to predict a 420,000 barrels/day annual contraction in global oil demand this year. Yet as the conflict has outlasted initial assumptions, the agency may be forced to further downgrade its outlook. “Our scenario forecast assumes there will be some sort of normalization from June. That’s looking unlikely,” Bosoni said. Early consumption losses have been led by falling jet fuel demand in the Middle East, coupled with declining petrochemical use and price-sensitive LPG consumption in India. In contrast, record inventory draws and government support have protected demand for products like gasoil and gasoline, which actually increased in Q1 relative to 2025 levels. “We see demand come in waves,” said Scott Nelson, head of trading at Indian refiner Reliance International, who warned that importers could come in “extremely prompt and urgently,” despite an initial quiet period that has tempered price spikes. The longer prices stay eleva