OPEC retains robust outlook for 2026 oil demand growth
Oil production in the Middle East has reduced substantially in line with the production and supply chain disruptions due to the Middle East conflict — but demand for the overall year and the longer-term horizon remain robust after an initial near-term dip, according to OPEC’s latest monthly report.
The monthly oil market report (MOMR) reveals sharp falls in crude output for OPEC producers in the Gulf such as Saudi Arabia, the UAE, Iraq, and Kuwait during March, coupled with a longer-term picture showing continued strong need for supply as consumption rebounds in later months.
Outlook robust beyond demand dip
OPEC, in its first public assessment of the impact of the US/Israel-Iran war, lowered its forecast for world oil demand in the second quarter by 500,000 barrels per day — an average 105.07 mbpd, down from the 105.57 mbpd forecast in the previous month’s report.
But it made no change to its full-year outlook.
Oil and gas prices soared globally in March amid the effective closure of the Strait of Hormuz, transit route for one-fifth of the world’s oil and gas. The energy supply crunch has impacted consumers and businesses globally and prompted government action, such as work-from-home initiatives, to conserve supplies and curb demand.
In its report, OPEC said: “Demand growth for the second quarter of 2026 is revised down for both the OECD and non-OECD (countries), driven mainly by slight transitory weakness in oil demand growth, given ongoing developments in the Middle East.”
The report reveals that overall member country production plunged 27% month-on-month from 28.7 million bpd (mbpd) to 20.8 mbpd.
Sunnier forecast for growth
OPEC’s outlook going into summer and beyond is more optimistic.
“In 2026, global oil demand is forecast to grow by a healthy 1.4 mbpd year on year, driven almost entirely by demand from non-OECD regions, mainly China, India and Other Asia,” it reports.
On a quarterly basis, it says global oil demand in 2026 is set to grow by about 1.5 mbpd year on year in Q1, 0.9 mbpd year on year in Q2, 1.6 mbpd year on year in Q3 and 1.6 mbpd year on year in Q4.
It expects the “slight transitory weakness in oil demand growth” in the second quarter to be compensated in the third and fourth quarters.
Figures under scrutiny
OPEC has predicted less war-related impact on world oil demand in 2026 when compared to some other forecasters, such as the US government’s Energy Information Administration (EIA).
OPEC’s forecast that demand will continue to rise remains unchanged, in stark contrast to the EIA which halved its outlook prediction in an April 7 report.
The International Energy Agency (IEA), also slashed its oil demand growth forecast, due to Middle East and Asia-Pacific contraction. It said Hormuz closure and energy infrastructure attacks prompted it to reverse previous forecasts of a sizeable surplus.
Now predicting an 80,000 bpd downsize in demand growth this year — from a 640,000 bpd rise in March — the IEA says the conflict has “thoroughly upended the global outlook for oil consumption”.
Based on a severe scenario of longer-term supply disruptions, it suggests demand could shrink by 5 mbpd year on year on average from the second quarter to the fourth quarter.
Economies need energy
OPEC says global economic growth forecasts remain unchanged from last month’s assessment at 3.1% for 2026 and 3.2% for 2027, suggesting demand for energy.
The demand for crude from countries participating in the Declaration of Cooperation (DoC) in 2026 “remains unchanged from the previous month’s assessment to stand at 42.9 mbpd ... about 0.6 mbpd higher than in 2025,” says the report.
“The demand for DoC crude in 2027 also remains unchanged from the previous month’s assessment to stand at 43.6 mbpd. This is about 0.6 mbpd higher than the 2026 forecast.”
