OPEC Cuts 2026 Global Oil Demand Growth Forecast

OPEC on Wednesday lowered its forecast for global oil demand growth in 2026, joining other forecasters such as the International Energy Agency in cutting expectations due to the Iran war. 

The producer group sees a smaller hit to demand than the IEA, which earlier on Wednesday increased its estimate of the decline in oil use this year. OPEC said consumption would rebound later and raised its demand growth forecast for 2027.

The war has effectively closed the Strait of Hormuz, a key global oil route, curbing millions of barrels of Middle East output and sending fuel prices soaring.

The surge is hitting consumers and businesses, and prompting government steps to conserve supplies.

World oil demand will rise by 1.17 million barrels per day in 2026, OPEC said, down from 1.38 million bpd expected previously. For 2027, OPEC expects oil demand to rise by 1.54 million bpd, up 200,000 bpd from the previous forecast.

“The global economic growth continues to show resilience for this year despite geopolitical tensions, particularly in the Middle East,” OPEC said, leaving its economic growth forecasts unchanged.

Global oil demand is expected to average 104.57 million bpd in the second quarter, down from the 105.07 million bpd forecast last month, OPEC said.

The previous report had already cut the second-quarter estimate by 500,000 bpd. OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies such as Russia, had agreed to resume output increases from April, but the closure of Hormuz has made it impossible to deliver on the deal. The report said output fell further in April. OPEC+ crude output averaged 33.19 million bpd in April, down 1.74 million bpd from March, the report said, citing secondary sources OPEC uses to monitor its production. The April figure includes the United Arab Emirates, which left OPEC on May 1.

Meanwhile, stock markets were mixed Wednesday and oil prices steadied but remained above $100 a barrel as investors awaited a high-stakes summit between the United States and China, and Middle East peace talks stalled. Oil prices surged earlier this week on signs that no breakthrough was in sight to resume crucial Gulf tanker and cargo traffic through the Strait of Hormuz, paralyzed by the Middle East war.

The International Energy Agency warned that countries were tapping into oil inventories and strategic reserves at a “record pace”, meaning further price volatility was likely.

Following surges for equities worldwide on the back of solid corporate earnings and hopes for a swift end to the Mideast conflict, investors were content to hunker down.

Wall Street indexes opened little changed after several weeks of hitting record highs despite the geopolitical turbulence, while in Europe, London and Frankfurt edged higher and Paris fell in afternoon deals.

“There is a calmer tone to markets on Wednesday,” said Kathleen Brooks, research director at trading group XTB, adding that markets were boosted by a “no news is good news” approach.

The dollar firmed, while UK government bonds remained under pressure as Keir Starmer battled to remain prime minister, causing the country’s borrowing costs to rise.

Traders are looking to China, where Trump landed Wednesday after saying he expected a “long talk” with his counterpart Xi Jinping about Iran.

The US president said he would ask Xi to “open up” China to American firms, adding that AI chip titan Nvidia’s boss Jensen Huang was a last-minute invite among a host of top chief executives joining the trip.