Trump's Iran War Is Inadvertently Cutting Global Fossil Fuel Use: WaPo

President Donald Trump has spent his second term pushing fossil fuels and gutting climate rules, but the seven-month war with Iran has quietly done what his climate policy tried to prevent, cut global oil and gas demand. His seven-month war with Iran is pushing the world away from oil and gas faster than almost anyone predicted, according to a Washington Post analysis of IEA data.

What the data shows

The International Energy Agency now projects that worldwide oil demand will fall 2.5 percent in 2026 compared with last year, in a sharp reversal from its January outlook, which called for strong growth in oil and gas use.

That would erase the amount of greenhouse gas emissions created by 42 million internal combustion engine cars. Such an annual decline has not happened since the height of the coronavirus pandemic.

Why demand is falling

Energy shipments from the Middle East remain stymied by Tehran closing the Strait of Hormuz. That in turn has prompted a reduction in oil and gas consumption around the world, which has significantly reduced overall carbon emissions.

Even with a spike in coal burning, as countries race to replace the oil and gas they can no longer access or afford, fossil fuel emissions this year are on track to be significantly lower than they were last year.

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The permanence question

“For every month the conflict lasts,” DNV wrote, “the probability of permanent demand destruction increases.” The firm points to Europe post-2022 as the template, citing Europe's experience after Russia's 2022 invasion of Ukraine, when a natural gas shortage led to a lasting move away from imported fuel and a boom in renewable energy.

China has seen a boom in exports of its solar panels and electric vehicles since February as Asian consumers especially look for alternatives to fossil fuels.

Options market and stocks to watch

XOM and CVX: watch for how the majors guide on demand assumptions if the IEA revision holds, particularly downstream and refining margins as global consumption slips.

USO: watch crude ETF flow and skew as traders weigh a supply shock against a demand-destruction narrative.

TSLA and TAN: watch for renewed interest in EVs and solar names if higher fuel prices push through to consumer behavior, as the WaPo piece flags globally.

BTU: watch coal names given the noted spike in coal burning as substitutes for restricted oil and gas.

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