Oil markets adjust to disruption as OPEC, IEA look to 2027 recovery
The global oil market is entering a new phase of adjustment, shaped by geopolitical developments and evolving trade routes, as revealed in the latest reports from OPEC and the International Energy Agency (IEA).
Their outlooks offer insight into the factors influencing demand, supply and inventories today, while also highlighting why both organisations expect growth momentum to strengthen again in 2027.
OPEC forecasts demand growth of 0.6 mb/d in 2026 year-on-year, supported primarily by rising consumption in non-OECD economies and Asian markets such as China and India. According to the latest OPEC Monthly Oil Market Report, “The OECD is forecast to slightly decline by about 40 tb/d, while the non-OECD is forecast to grow by about 0.6 mb/d.”
‘A downward pressure on oil use’
The IEA, on the other hand, predicts that global oil demand will decline by 1.6 million barrels per day (mb/d) this year. In its latest Oil Market Report, it attributed this decline to the “ongoing closure of the Strait of Hormuz and elevated fuel prices” which “continue to weigh on oil consumption.” The IEA added that higher fuel prices have also put downward pressure on oil use.
Although OPEC and the IEA differ in their near-term outlooks, both highlight the ways in which producers and refiners are adjusting to geopolitical uncertainties and the closure of key maritime chokepoints.
While producers and traders are reassessing trade routes and looking to ensure resilience in an environment where supply chains and trade routes can be disrupted with little warning, refiners are adjusting crude sourcing strategies.
Oil demand set to return in 2027
Both organisations also remain optimistic about oil demand for 2027, and anticipate returning growth. OPEC forecasts global oil demand growth of 2.2 mb/d, supported largely by non-OECD economies. OPEC's outlook suggests steadier growth from producers outside the Declaration of Cooperation (DoC).
The organisation expects non-DoC liquids production to increase by around 0.6 mb/d in both 2026 and 2027, with Brazil, the US, Canada, and Argentina driving growth next year, while Qatar joins Canada, Brazil, and Argentina as a leading contributor in 2027.
Similarly, the IEA projects a growth of 2.5 mb/d next year, with global oil supply having risen by 2.4 mb/d to 101.5 mb/d this July. Therefore, the broader message is consistent: oil will remain a critical component of the global energy mix, particularly as emerging economies continue to expand.
Falling inventories tighten supply
At the same time, the IEA’s latest report warns that global oil inventories continue to draw down at a rapid pace. The agency now expects a global oil market deficit of 1.8 mb/d during the third quarter of 2026, more than double its previous estimate of around 800,000 barrels per day.
Observed global inventories fell by 69 million barrels in July alone, while cumulative stock draws reached 410 million barrels between the end of February and the end of July.
By the end of July, observed stocks had dropped below 7.9 billion barrels for the first time since April 2025, highlighting the extent to which available inventory buffers have been reduced. The IEA noted that although the market could return to surplus later this year, inventory depletion remains a significant factor influencing market dynamics.
