OPEC has lowered its forecast for global oil demand growth in 2026 for the fourth consecutive month, cutting the projection to 1.17 million barrels per day from 1.38 million, as the economic fallout from the Iran conflict continues to weigh on consumption.The downward revision, published in OPEC’s latest monthly oil market report, reflects the ongoing disruption to the Strait of Hormuz, which has effectively closed to commercial shipping for months and removed millions of barrels of Middle East production from global markets. The price spike resulting from the closure is hitting consumers and businesses worldwide, forcing governments to take steps to conserve supply.
Demand Growth Halved From Earlier Projections
The latest forecast represents a dramatic shift from earlier this year, when OPEC had projected demand growth of over 1.5 million bpd for 2026. Global oil demand is now expected to average 104.57 million bpd during the second quarter, down from the 105.07 million bpd estimated in the previous month’s report. OPEC’s own crude production averaged just 32.19 million bpd in April, a decrease of 1.74 million bpd compared to March, as the Hormuz closure made it impossible to meet planned production increases.
IEA Takes Even More Pessimistic View
OPEC’s revision comes as the International Energy Agency has taken an even more cautious stance, having recently increased its estimate of the decline in oil consumption this year. The IEA and OPEC have diverged on the severity of the demand impact, with OPEC maintaining that consumption will recover later in the year and into 2027. OPEC projects demand growth of 1.54 million bpd in 2027, an increase of 200,000 bpd from its previous estimate.
We expect crude oil prices to remain elevated through the third quarter as Hormuz transits continue to face severe constraints, with Brent averaging around $85 per barrel.
The divergence between the two agencies highlights the uncertainty surrounding the conflict’s long-term impact on global energy markets. While OPEC has repeatedly maintained a more optimistic outlook, its four consecutive downgrades suggest the reality is proving worse than even the group’s most cautious projections.
Sources: Reuters; OPEC Monthly Oil Market Report; IEA; World Energy News
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