• The IEA downgraded its global oil-demand forecast to 1.2 million barrels a day through the rest of the year.

• The group cited weak OECD deliveries, the end of the post-COVID rebound, and the adoption of EVs.

• The agency also forecast a slowdown in oil demand for 2025.

Iran's strikes on Israel over the weekend sparked a fresh wave of fears over oil supply disruptions, but the International Energy Agency foresees a global slump in oil demand amid a host of factors set to weigh on the market through the rest of 2024.

The group slashed its forecast by about 100,000 barrels per day to 1.2 million barrels, attributing it to "exceptionally weak OECD deliveries," "the completion of the post-Covid rebound," and an expanding fleet of electric vehicles, according to a report released on Friday.

With the COVID-19 recovery having run its course, the IEA projects a further slowdown in oil demand expansion to 1.1 million barrels a day in 2025, with most non-OPEC countries driving supply growth thanks to output curbs among OPEC members, while OECD states see their oil consumption decline by 60,000 barrels a day in both 2024 and 2025.

The agency's reduced forecast for demand arrives amid simmering tensions in the Middle East between Israel and Iran, which have stirred up concerns of potential supply snags and a further surge in oil prices.

Toril Bosoni, head of the oil industry and markets division at the IEA, said on CNBC's "Street Signs Europe" that the surging sales of electric vehicles, particularly in China, Europe, and the United States, are putting a dent in global oil demand.

"There has been a lot of talk about sales not increasing as much as maybe was expected, but EV sales and increased fuel efficiencies in the car fleet is lowering gasoline demand, at least in advanced economies and particularly in China," she said.

Meanwhile, following Iran's attacks against Israel over the weekend, Wall Street veteran Ed Yardeni predicted an 11% spike in Brent crude prices to $100 a barrel, evoking memories of the 1970s energy crises and the ensuing economic turmoil.

The IEA's Bosoni said there are numerous pain points she's keeping tabs on in today's oil market, which could potentially lead to "significant outages."

"The continued tanker attacks in the Red Sea is of key concern, but also escalating tensions between Iran and Israel, and then we're seeing tensions between Russia and Ukraine continue, with attacks on Russian refineries," she said.

West Texas Intermediate crude oil fell 0.74% to $85.03 per barrel as of Monday 1:30 pm, while Brent was down 0.74% to $89.78 a barrel.

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