El Niño's long shadow over fuel demand

A very strong El Niño, peaking in northern winter 2026-27, could reduce global demand for gasoline, diesel and jet fuel. At the aggregate level, the figure looks like it is contained. At the regional and sectoral level, it does not.

Wood Mackenzie modelled the demand impact by averaging GDP per capita losses from the three strongest El Niño events on record: 1982-83, 1997-98 and 2015-16. Income elasticities, adjusted for product type and region, convert each country's projected income loss into reduced fuel consumption.

Fill in the form to download the full report, or read on for a preview of some of the key themes explored.

1. How income loss, not weather, drives the demand shock

El Niño does not simply warm the planet. It redistributes rainfall and heat, bringing drought to some regions and floods to others. For energy markets, that redistribution is the critical variable, not the temperature shift itself.

Agriculture, hydropower, freight, and electricity demand all absorb the disruption. Those channels cut GDP and household income, and lower income translates directly into lower fuel consumption. The weather event ends. The income shortfall does not.

How does this translate into fuel demand across the most exposed markets? Find out more in the full report.

2. Road transport carries the heaviest burden

Road transport carries the heaviest burden, with gasoline and diesel accounting for much of the overall loss. Aviation accounts for most of the remainder, with jet fuel the most income-sensitive product per barrel.

The trajectory of the loss matters as much as its size. Each year after the event, affected economies fall further behind the growth path they would otherwise have followed. Lost growth compounds. This is a multi-year income drag, not a seasonal disruption.

Explore the impact across road transport, gasoline, diesel and aviation in the full report.

3. US income response shapes the global outcome

North America records the largest volume loss, with the United States accounting for the majority of the regional total. Its prominence reflects the scale of the market, not the depth of its climate exposure.

Latin America and Africa carry the steepest proportional losses. These markets include economies that rely heavily on rain-fed agriculture and hydropower, shortening the distance between weather shock and income loss.

Asia Pacific also faces country-level dynamics moving in different directions, with hydropower, back-up generation, aviation and other factors shaping the impact on liquid fuel markets.

Find out how the impact differs across North America, Latin America, Africa and Asia Pacific in the full report.

4. A demand loss that builds, not fades

The final intensity of the 2026-27 event will determine the scale of the income shock in the most exposed economies. US economic performance through 2028 matters most for volume. The pace of recovery in Andean markets shapes the Latin American share and the overall depth of the loss curve.

The two dimensions of the impact point to the same underlying dynamic. El Niño's effect on fuel markets extends well past the weather event that triggers it, and the income channel is the mechanism that sustains it.

For energy companies, commodity traders and infrastructure investors with exposure to affected regions, that distinction carries direct implications for capital allocation.

Download the full report to explore the implications for fuel demand, infrastructure investment and supply assumptions.

As a Knowledge Partner of ADIPEC 2026, Wood Mackenzie brings its independent research, data and expertise to Leadership Roundtables and discussions on the issues shaping energy markets and the wider global energy system.