Global oil demand is expected to be almost one million barrels per day less than was forecast before the Iran war, as shortages and soaring costs prompt drastic cutbacks by consumers and businesses, a report by the International Energy Agency (IEA) said on Wednesday.
With the closure of the Strait of Hormuz choking off supplies and keeping prices high, less oil is being used to make products such as jet fuel, LPG cooking gas and petrochemicals, the Paris-based IEA said in its monthly oil report, forecasting the biggest quarterly demand drop since the COVID pandemic.
The Iran war “upends our global outlook”, the government-backed agency said, adding that it now expects oil demand to shrink by 80,000 barrels per day in 2026 from last year.
Before the conflict began, the IEA said in February it expected oil demand to rise by 850,000 barrels per day this year, meaning the difference between the pre-war and current estimates is 930,000 barrels a day, or 340 million barrels a year.
That could have a significant impact on the outlook for planet-heating carbon emissions this year.
At an intensity of 434 kg of carbon dioxide per barrel of oil – the estimate used by the US Environmental Protection Agency – the annual reduction in carbon dioxide emissions from oil for 2026, compared with the pre-war forecast, is similar to the amount emitted by the Philippines each year.
Harry Benham, senior advisor at Carbon Tracker, told Climate Home News that he expects at least half of the reduction in oil demand to be permanent because of efficiency gains, behavioural change and faster electrification.
The oil shock is leading to oil being replaced, especially in transport, with electricity and other fuels, just as past oil shocks drove lasting reductions in consumption, he said. “The shock doesn’t delay the transition – it reinforces it,” he added.
Demand takes a hit
While demand for oil has fallen significantly, supplies have fallen even further. Supply in March was 10 million barrels a day less than February, the IEA said, calling it the “largest disruption in history”.
This forecast relies on the assumption that regular deliveries of oil and gas from the Middle East will resume by the middle of the year, the IEA said, although the prospects for this “remain unclear at this stage”.
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Last month, US Energy Secretary Chris Wright told the CERAWeek oil industry conference that prices were not high enough to lead to permanent reductions in demand for oil, known as demand destruction.
But the IEA said on Wednesday that “demand destruction will spread as scarcity and higher prices persist”.
Industries contributing to weaker demand for oil include Asian petrochemical producers, who are cutting production as oil supplies dry up, the report said, while consumers are cutting back on liquefied petroleum gas (LPG), which is mainly used as a cooking gas in developing countries, the IEA said.
Flight cancellations caused by the war have dampened demand for oil-based jet fuel, the IEA said. As well as cancellations caused by risk from the conflict itself, airports have warned that fuel shortages could lead to disruption.
Across the world, governments, businesses and consumers have sought to reduce their oil use after the war. The government of Pakistan has cut the speed limit on its roads, so that people drive at a more fuel-efficient speed, and Laos has encouraged people to work from home to preserve scarce petrol and diesel.
Nepal’s EV revolution pays off as oil crisis causes pain at the pumps
Consumers in Bangladesh are seeking electric vehicles (EVs) to avoid fuel queues and, in Nigeria, more people are seeking to replace petrol and diesel generators with solar panels, Climate Home News has reported.
In the longer term, the European Union is considering cutting taxes on electricity to help it replace fossil fuels and France is promoting EVs and heat pumps.
IEA urged to help “future-proof” economies
Meanwhile, the IEA came under fire last week from energy security experts, including former military chiefs, who signed an open letter in which they accused the agency of offering “only a temporary response to turbulent markets”, calling for stronger structural action “to future-proof our economies”.
They said that besides releasing emergency oil stocks and offering advice on how to reduce oil demand in the short term, the IEA should show countries how to reduce their exposure to volatile oil and gas markets.
The IEA has also been under pressure from the Trump administration to talk less about the transition away from fossil fuels.
This article was amended on 15 April 2026 to correct the drop in 2026 forecast oil demand from “nearly a billion” to “nearly a million”
The post IEA slashes pre-war oil demand forecast by nearly a million barrels per day appeared first on Climate Home News.
IEA slashes pre-war oil demand forecast by nearly a million barrels per day
The UK is no longer the top contributor to the UN’s flagship Green Climate Fund (GCF), after the government announced that it only intends to honour half of its most recent pledge.
Amid wider cuts to its climate aid for developing countries, the UK informed the GCF in May that it will reduce its commitment for the 2024-27 period to £815m ($1.1bn).
In doing so, the Labour government is drastically cutting a Conservative pledge of £1.62bn ($2.16bn), hailed by former prime minister Rishi Sunak’s government as “the biggest single funding commitment the UK has made to help the world tackle climate change”.
This “record” pledge also meant the UK became the top GCF funder, after the Trump administration withdrew $4bn in pledged US funds in 2025.
Now, the UK follows the US in becoming the second major donor to cancel substantial funding, leaving aid experts concerned that other developed countries will follow suit.
As the chart below shows, the UK’s total past and promised contributions to the GCF have now dropped below those of Germany, France and Japan.
The GCF is the largest dedicated UN climate fund and is seen as a vital way of raising grant-based climate finance for developing countries. It oversees more than $20bn worth of funding across 354 projects and programmes.
Developed countries, such as the UK, are obliged under the Paris Agreement to provide climate finance. One of the main ways to do this is through specialised climate funds, such as the GCF.
However, despite countries committing to increase their climate finance over time, progress in scaling up GCF contributions between funding rounds has been gradual.
With its now-revoked £1.62bn pledge in 2023, the UK was among the donors that had increased its GCF pledging compared with the previous 2019 funding round.
The latest reduction means the UK will now provide around 45% less funding than it did during the 2019 round. This is the biggest reduction between rounds by any major donor, apart from the US.
In an email to the GCF board, reported by the Financial Times, the fund’s executive director Mafalda Duarte said the UK’s actions were “expected to have a material impact on the delivery” of the fund’s projects.
According to the newspaper, Duarte noted that the move came as the UK cuts its overall aid budget in order to “invest more in addressing growing security threats”.
In March, the UK government announced plans to spend “around £6bn” of its aid budget on climate projects in developing countries over the next three years.
Carbon Brief analysis suggests that this spending amounts to roughly halving the UK’s annual climate finance, when accounting changes and inflation are factored in.
The post Analysis: UK no longer top UN Green Climate Fund donor after latest aid cut appeared first on Carbon Brief.
Analysis: UK no longer top UN Green Climate Fund donor after latest aid cut
SYDNEY, Tuesday 12 May 2026 — Ahead of tonight’s Federal Budget, the following statement can be attributed to David Ritter, CEO of Greenpeace Australia Pacific:
“As the Albanese government hands down the budget, it has an obligation to both look after households today, and to set Australians up for a flourishing future.
“The government has an opportunity to give Aussies a fair shake of the sauce bottle by taxing gas corporations fairly, accelerating the clean, affordable renewable solutions we already have, backing its own nature law reforms with appropriate funding and by protecting our oceans, forests and climate from polluting gas projects.
“The massive swell for fairly taxing gas corporations shows the public mood has permanently shifted; most Australians rightly do not accept that gas corporations like Woodside and Santos should make obscene war profits, while everyday people face soaring bills, and natural wonders like Scott Reef are threatened by reckless gas drilling projects.
“The global energy shock has exposed the dangers of our dependence on coal, oil and gas, and made clear that our future security and prosperity is in clean, affordable and homegrown wind and solar power.
“This must be a budget to benefit Australians, not gas corporations.”
Greenpeace Australia Pacific’s 2026 Federal Budget expectations can be found here.
–ENDS–
Notes:
Greenpeace has spokespeople available for interview before and after the budget announcement, including experts who can speak on Australia’s climate and emissions, the gas tax, Woodside’s Browse project, Labor’s new nature law, and our renewable future.
Media contact:
Kimberley Bernard on +61407 581 404 or kbenard@greenpeace.org
Federal Budget must give Aussies a ‘fair shake of the sauce bottle’: Greenpeace
Climate Change
‘A new low’: Greenpeace responds to Woodside’s flawed emissions reduction and renewables modelling
PERTH, Tuesday 12 May 2026 — In response to Woodside’s Browse economic modelling released yesterday, the following comments can be attributed to WA Campaign Lead at Greenpeace Australia Pacific, Geoff Bice:
“Greenpeace has analysed Woodside’s report on the polluting Browse gas project against independent modelling of WA’s energy system and emissions, and found glaring holes in the case made for the project.
“Woodside has reached a new low by modelling WA’s emissions reduction and energy transition pathway based on wildly expensive and risky decarbonisation options simply to justify its reckless Browse development at Scott Reef, initially rejected by the WA Environmental Protection Authority on environmental grounds.
“The WA Government cannot allow climate policy to be directed by climate vandals like Woodside. The clearest way to get WA’s emissions down is by setting clear emission reduction targets, which Greenpeace continues to call for.”
Key points from Greenpeace’s analysis of Woodside’s modelling follow:
- Gas is the most expensive form of available electricity generation, according to the CSIRO; IEEFA also found that Browse gas would be about four times higher than the current average production cost of domestic gas in WA.
- Direct air capture (DAC): The model assumes WA will be able to capture 6.9Mt of CO2/year by 2050. Worldwide, the current total volumes captured are 0.01 Mt CO2/year. DAC is currently priced at a minimum of $USD-400/tonne with many estimates ranging higher. Even reduced to $200/tonne, the cost per year of the volumes modelled becomes a staggering $1.38 billion, or $34.5 billion by 2050.
- Carbon dumping, or carbon capture and storage (CCS): The model requires 40 times the amount of sequestration that occurred last year at WA’s only CCS operation on Barrow Island (32.4Mt compared to 1.3Mt). Barrow Island CCS has consistently failed to meet requirements and last year alone cost $344m (at 265 AU$/tCO2). At those prices the Woodside modelling results in a cost per year by 2050 to be $8.6 billion.
- Woodside’s Pluto gas facility has been supplying less than 4% to the WA market, far short of the 15% required under the WA domestic gas reservation policy.
- Woodside includes $1.6 billion payable via the Offshore Petroleum Levy. The Levy was implemented to offset offshore decommissioning costs to the taxpayer but is set to expire in 2030 — 3 years before the Browse field is proposed to come online.
-ENDS-
High res images and footage of Scott Reef can be found here
Media contacts:
Emma Sangalli on 0431 513 465 or emma.sangalli@greenpeace.org
Kate O’Callaghan on 0406 231 892 or kate.ocallaghan@greenpeace.org
‘A new low’: Greenpeace responds to Woodside’s flawed emissions reduction and renewables modelling
Analysis: UK no longer top UN Green Climate Fund donor after latest aid cut
Federal Budget must give Aussies a ‘fair shake of the sauce bottle’: Greenpeace
‘A new low’: Greenpeace responds to Woodside’s flawed emissions reduction and renewables modelling
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