Middle East conflict reduces oil demand in emerging markets

The International Energy Agency (IEA) reports that conflict in the Middle East has caused a sharp decline in oil demand across Southeast Asia and Africa. The downturn is attributed to disrupted trade flows, tighter fuel supplies, and increased prices.

In Southeast Asia, oil demand fell by an estimated 260,000 barrels per day (b/d), or 3.7% year-on-year between March and August 2026. This represents a significant deviation from prewar growth expectations. The IEA notes that the region is particularly vulnerable due to its exposure to disruptions in the Strait of Hormuz. While demand is expected to decline further in 2026, a rebound is projected for 2027 driven by economic growth in Indonesia, Vietnam, Malaysia, the Philippines, and Thailand.

African oil consumption also reversed trends, contracting by 2.5% year-on-year during the same period. The region's reliance on imported refined products like gasoline and diesel has heightened its vulnerability to price volatility. In Nigeria, oil demand dropped by nearly 30% in July. Conversely, South America has shown resilience due to a lower dependence on Middle Eastern oil supplies.