OPEC has lowered its forecast for global oil demand growth in 2026 for the third consecutive month, underscoring growing concerns that geopolitical tensions, disrupted trade flows and a slowing global economy will weigh on fuel consumption.
In its monthly oil market report released on Monday, OPEC projected world oil demand will grow by 780,000 barrels per day (bpd) in 2026, down from its previous forecast of 970,000 bpd. The latest revision represents a reduction of 190,000 bpd and marks the third straight downgrade this year.
Even after the revision, OPEC continues to project a less severe impact on oil demand than the International Energy Agency (IEA), maintaining that the global economy has remained relatively resilient despite months of conflict involving Iran and disruptions to one of the world’s most important energy corridors.
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“The global economic growth dynamic in the first half of 2026 has remained broadly resilient,” OPEC said in the report.
The organization added that an easing of geopolitical tensions could improve the outlook later this year.
“Potential moderations in geopolitical tensions may provide some upside for global growth in the second half of 2026 if energy markets and trade flows stabilize further,” it said.
Iran Conflict Continues To Shape Oil Outlook
OPEC’s latest assessment comes as the conflict involving Iran continues to dominate energy markets. The war effectively shut the Strait of Hormuz for months, disrupting millions of barrels of crude exports from the Middle East and triggering sharp increases in oil prices.
Although shipments had begun recovering after an interim peace agreement between the United States and Iran, renewed military exchanges in recent days have once again raised concerns over the security of the strategic waterway.
The renewed hostilities have already pushed oil prices higher as traders price in the growing risk of fresh supply disruptions. The Strait of Hormuz normally carries roughly one-fifth of global oil consumption, making any threat to shipping a major source of volatility for energy markets.
While trimming its near-term outlook, OPEC became more optimistic about longer-term demand. The group raised its forecast for 2027 oil demand growth to 1.94 million bpd, an increase of 210,000 bpd from its previous estimate, suggesting it expects energy consumption to rebound more strongly once geopolitical disruptions ease and global trade normalizes.
The stronger 2027 projection also reflects expectations that emerging-market demand will remain resilient despite the rapid expansion of renewable energy and electric vehicles.
The report showed OPEC+ has begun restoring production after output was curtailed during the conflict.
Crude production from OPEC+ members averaged 36.28 million bpd in June, roughly 3 million bpd higher than in May, according to secondary sources used by OPEC to monitor production. The increase shows Gulf producers gradually restarting output that had been suspended during the Iran war.
Earlier this year, OPEC+ had agreed to begin unwinding voluntary production cuts from April. However, the closure of the Strait of Hormuz prevented several producers from increasing exports to their agreed quotas, delaying implementation of the supply agreement.
The May production figures also reflect the departure of the United Arab Emirates, which formally exited both OPEC and OPEC+ on May 1.
The report also highlighted tightening U.S. oil inventories, another factor supporting crude prices. According to U.S. Department of Energy data, crude oil held in the Strategic Petroleum Reserve (SPR) declined by about 3 million barrels last week to 316.5 million barrels, the lowest level since April 1983.
The latest decline forms part of a previously announced U.S. plan to release 172 million barrels from the reserve.
Since the U.S.-Israeli war against Iran began in late February, SPR inventories have fallen by 98.9 million barrels as of July 10. Total U.S. crude inventories, including both commercial stocks and the SPR, have declined by 123.9 million barrels to 730.8 million barrels, their lowest level since 1984, highlighting how geopolitical disruptions and government stock releases have significantly tightened available supplies.
Lower inventories generally reduce the market’s ability to absorb unexpected supply shocks, making oil prices more sensitive to geopolitical developments.
Maritime Blockade Raises New Supply Concerns
Adding to the uncertainty, the U.S. military is preparing to enforce a maritime blockade targeting Iran.
The U.S. Navy-led Joint Maritime Information Center (JMIC) said the blockade will take effect at 2000 GMT on July 14, covering Iranian ports, oil terminals, and coastal waters.
Under the advisory, vessels suspected of entering or leaving blockaded areas without authorization could be intercepted or seized.
“Any vessel suspected of entering or departing the blockaded area without authorization is subject to interception, diversion, and capture. Non-compliant vessels may be legally compelled with force,” the advisory said.
The center added that neutral commercial traffic transiting the Strait of Hormuz to and from non-Iranian destinations would continue to be permitted, in an effort to minimize broader disruptions to global shipping.
The combination of renewed military tensions, tighter global inventories, and continued uncertainty over shipping routes is likely to keep oil markets highly volatile in the coming months. While OPEC believes the global economy remains resilient enough to support continued demand growth, its third consecutive downgrade implies that geopolitical risks and slower economic activity are increasingly tempering the pace of global oil consumption.