World Bank Warns Oil Demand Destruction Is Spreading Globally Amid Strait of Hormuz Disruptions

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Title : World Bank Warns Oil Demand Destruction Is Spreading Globally Amid Strait of Hormuz Disruptions
Link : World Bank Warns Oil Demand Destruction Is Spreading Globally Amid Strait of Hormuz Disruptions

The World Bank described the Strait of Hormuz disruption as 'the largest energy supply shock on record.'

The World Bank has warned that disruptions in the Strait of Hormuz and escalating conflict in the Middle East are triggering a global oil supply shock that is beginning to suppress energy demand worldwide. In its May 7 analysis, the World Bank said that global oil demand declined by 0.8 million barrels per day year-over-year in March and is forecast to fall by another 1.5 million barrels per day in the second quarter of 2026. “Oil demand destruction is emerging,” the World Bank said, citing rising prices, trade disruptions, and reduced economic activity in advanced economies, Asia, and the Middle East.

The warning came as Brent crude prices surged following what the World Bank described as the “near-total disruption” of shipping through the Strait of Hormuz. Roughly one-quarter of global seaborne crude oil trade passes through the narrow waterway. By the end of March, Brent crude prices had risen approximately 65 percent, or $46 per barrel, marking what the World Bank called the largest monthly increase on record.

Prices later eased after a temporary ceasefire announcement but remained volatile amid uncertainty over negotiations involving Iran and the United States. The World Bank projected that global oil output would decline by 6.9 million barrels per day, or 6.6 percent year-over-year, during the second quarter of 2026, representing the sharpest quarterly decline since the COVID-19 pandemic. The United States is expected to account for most non-OPEC+ production growth, with output increasing by roughly 500,000 barrels per day, partially offsetting Middle East disruptions. (Read More)