Global oil demand growth forecast for 2026 slashed again! OPEC joins IEA in major reduction, but appears more "gentle"

Due to the ongoing closure of the Strait of Hormuz caused by the Iran war, the Organization of the Petroleum Exporting Countries (OPEC) lowered its global oil demand growth forecast for 2026 on Wednesday, becoming another major energy institution to downgrade expectations after the International Energy Agency (IEA). However, OPEC's assessment of the extent of demand damage is more moderate compared to IEA. Demand forecast: Decreased for 2026, increased for 2027 According to OPEC's latest monthly report, global oil demand in 2026 is expected to increase by 1.17 million barrels per day, lower than the previous forecast of 1.38 million barrels per day. At the same time, OPEC raised the demand growth forecast for 2027 to 1.54 million barrels per day, an increase of 200,000 barrels per day from the previous forecast. The organization believes that consumption will rebound later. In the report, OPEC stated, "Although geopolitical tensions persist, particularly in the Middle East region, global economic growth this year continues to show resilience." The organization maintains its forecast for economic growth unchanged. Strait of Hormuz closure puts pressure on supply and demand The ongoing conflicts in the Middle East have led to the "effective closure" of the global key oil transportation route, the Strait of Hormuz, cutting millions of barrels of Middle Eastern crude oil production and driving fuel prices up. Rising oil prices are impacting consumers and businesses, forcing governments around the world to take measures to conserve supply. OPEC estimates that the global oil demand in the second quarter of 2026 will average 104.57 million barrels per day, lower than last month's forecast of 105.07 million barrels per day. It is worth noting that the previous report had already lowered the demand estimate for the second quarter by 500,000 barrels per day. OPEC+ production increase plan hampered, sharp drop in April production OPEC+ (including OPEC and allies such as Russia) had previously agreed to resume production increases from April, but the closure of the Strait of Hormuz prevented the agreement from being implemented. The report shows that OPEC+ production further declined in April. According to secondary source data used by OPEC to monitor production, the average crude oil production of OPEC+ in April was 33.19 million barrels per day, a significant decrease of 1.74 million barrels per day compared to March. It should be noted that the April data includes the United Arab Emirates - which officially withdrew from OPEC on May 1. More optimistic than the IEA Earlier in the day, the IEA pointed out in its latest monthly report that global oil inventories decreased at a rate of about 4 million barrels per day in March and April. This decrease is the fastest rate the organization has recorded. Since the escalation of the conflict in February, cumulative supply losses have reached 12.8 million barrels per day. In just the month of April, global supply further decreased by 1.8 million barrels per day. The IEA increased its estimate of the decline in oil consumption for this year and warned that inventories are decreasing at a record pace. In contrast, OPEC's assessment of the impact on demand is more moderate, and it expects demand to accelerate its recovery in 2027. Analysts pointed out that the differences in forecasts between the two institutions reflect different judgments on the duration of the conflict and economic impact. OPEC is more inclined to believe that the fundamentals of the economy are resilient, while the IEA focuses more on the short-term price pressures caused by supply and demand imbalances.