Opec has lowered its oil demand outlook for this year for the second consecutive time, while remaining confident of a “resilient” global economy amid the disruption caused by the US-Iran war.
The oil group cut its demand view to 970,000 barrels per day, from a previous assessment of 1.17 million bpd, the Vienna-based Opec said in its monthly report for June on Thursday.
The new estimate is a growth of about 1 million bpd, but is about 200,000 bpd lower from last month's forecast. Demand for the full year is pegged at 106.13 million bpd.
Demand in member countries of the Organisation for Economic Co-operation and Development is seen to grow by about 100,000 bpd to more than 46 million bpd, while demand in non-OECD nations is projected to add 900,000 bpd to 60.12 million bpd, Opec said.
Next year, global demand is expected to rebound, adding about 1.7 million bpd year-on-year, with total demand seen at nearly 108 million bpd, Opec said, projecting consumption would bounce back.
The conflict between the US and Iran has roiled global oil markets, especially with the effective shutdown of the Strait of Hormuz, which before the war welcomed about a fifth of oil and gas shipments daily. The resulting disruption has caused fuel prices to rise.
Opec did not explicitly mention the war in its latest report.
The US Energy Information Administration on Wednesday also lowered its demand estimates for this year by about 1 million bpd. Opec has maintained that the Iran war has a smaller impact on energy consumption, compared to assessments made by the EIA and the Paris-based International Energy Agency.
Opec's projections for global economic growth this year and next year were unchanged, remaining at 3.1 per cent and 3.2 per cent, respectively. Of the major economies – Brazil, China, the Eurozone, India, Japan, Russia and the US – all growth forecasts remained steady, except for a slight dip seen for the Eurozone this year.
Opec noted that the growth in non-OECD Asian economies, including China and India, has been “particularly robust”, underpinned by investments in artificial intelligence, “steady” international trade and fiscal measures that have helped offset higher energy costs.
The World Bank in April warned that, this year, energy prices would surge by 24 per cent and, on Thursday, it said the global economy is set to expand at its lowest rate since the Covid-19 pandemic.
Opec analysts, however, said “the global economic performance has remained resilient so far this year”.
“The US has witnessed solid growth in recent months, while the Eurozone and Japan have seen a slight moderation in economic momentum … [while] Russia is expected to gain some traction towards the end of the year after an earlier slowdown,” they said.
“Overall, the strong base [for the first half of this year], combined with an anticipated acceleration later in the second half, offers support for a robust global economic growth forecast of 3.1 per cent in 2026.”
Opec, however, cautioned that geopolitical events and developments related to the US tariffs are main issues for the remainder of this year.
Particularly, it will be keeping an eye on two key trade issues – America's blanket tariffs of 10 per cent that are set to expire at the end of July, and the review of the US-Mexico-Canada Agreement, also at the end of that month.
“The US-China trade truce from the end of last year may also need to be revisited in the second half of 2026,” Opec said.
The global oil market has been in the spotlight since the US-Iran war began on the last day of February, and the resulting disruptions has had rippled consequences on countries, particularly energy exporters, businesses and consumers.
Oil prices have been volatile as a result, spiking to highs just below records set at the onset of the Russia-Ukraine war in early 2022.
On Thursday, Brent, the gauge that tracks US crude, shed more than 1 per cent to $92.15 a barrel as of 6.06pm UAE time. West Texas Intermediate, the gauge that tracks US crude, fell 0.8 per cent to $89.30. Both are on pace for a second consecutive week of declines.
