OPEC cuts 2026 oil demand growth forecast for the second time

The Organization of the Petroleum Exporting Countries (OPEC) released its latest monthly oil market report on Thursday. Affected by geopolitical conflicts in Iran and blocked shipping in the Strait of Hormuz, OPEC lowered its global oil demand growth forecast for 2026 for the second consecutive month, ushering in a reshaping of the global energy supply and demand landscape.

Significant downward revision in demand forecasts: The report lowered the 2026 global crude oil demand increase to 970,000 barrels per day, a sharp contraction from the previous 1.17 million barrels per day; conversely, the 2027 demand growth forecast was raised by 190,000 barrels per day to 1.73 million barrels per day, as OPEC judges that crude oil consumption will see a strong recovery after geopolitical tensions ease.

Current global fuel prices continue to rise, continuously suppressing demand from residential and industrial sectors. Authoritative agencies such as the EIA and IEA are all bearish on crude oil demand trends for the current year; in comparison, OPEC's overall judgment is more optimistic, but the trend of lowering demand aligns with industry consensus.

The core drag on this demand downgrade comes from the Indian and Middle Eastern markets: India's demand growth forecast was cut by 60,000 barrels per day, and the Middle East region was lowered by 40,000 barrels per day. The impact of geopolitical conflict on Middle Eastern consumption is particularly significant. OPEC estimates that in the first month of the conflict (March), Middle Eastern crude oil consumption plummeted by 500,000 barrels per day year-on-year. The magnitude of the regional downturn depends entirely on the duration and severity of the shipping disruptions. On the economic front, OPEC maintained its previous view, believing that the global economy will remain resilient in the first half of 2026 and did not adjust global economic growth forecasts.

Supply side is severely constrained by the strait blockade: As the Strait of Hormuz is a core global crude oil transport route, the obstruction of the channel has prevented a large amount of Middle Eastern crude oil production capacity from being exported. Previously, OPEC+ finalized a production increase plan to start in April, which has been completely dashed by the geopolitical shipping crisis.

Secondary source statistics show that OPEC+ (including Mexico) crude oil daily average production in May was 33.13 million barrels, a decrease of 190,000 barrels from April; among them, Iran's production cut was the largest among member states, as U.S. sanctions directly caused a significant decline in Iranian crude oil exports. Additionally, the UAE officially withdrew from OPEC and the OPEC+ alliance on May 1, but its production was still included in the May production statistics.