OPEC cuts 2026 oil demand forecast for third straight month

OPEC on Sunday lowered its 2026 global oil demand growth forecast to 780,000 barrels per day, marking the third consecutive monthly downward revision, as the producer group's latest Monthly Oil Market Report pointed to lingering effects from geopolitical disruptions in the Persian Gulf region.argusmedia+1

The new estimate represents a cut of 190,000 bpd from last month's projection of 970,000 bpd, according to Argus Media. The revision continues a steady downgrade from the 1.17 million bpd OPEC forecast in May and the 1.38 million bpd projected in April.energynow+2

Demand Outlook Diverges Between 2026 and 2027

While trimming its near-term outlook, OPEC raised its 2027 demand growth forecast, now projecting an increase of roughly 1.7 million bpd for next year. The divergence reflects OPEC's view that current demand weakness stems from temporary disruptions rather than structural decline.facebook

The U.S. Energy Information Administration has taken a more bearish stance, forecasting in its July Short-Term Energy Outlook that global oil consumption will decrease by an average of 1.2 million bpd in 2026. The International Energy Agency, in its own July report, noted that a potential market surplus could emerge later this year if Strait of Hormuz flows continue to normalize.iea+1

June Production Surges After Gulf Recovery

Separately, OPEC crude oil production jumped by 3.3 million bpd in June to reach 19.4 million bpd, according to a Reuters survey published July 3, rebounding from more than two-decade lows hit during the effective closure of the Strait of Hormuz earlier this year.shafaq+1

Kuwait and Iran saw the largest output increases, with Saudi Arabia and Iraq also raising production as tanker flows through the strait partially resumed following a ceasefire agreement between the United States and Iran. However, Gulf output remains approximately 40 percent below pre-conflict levels, according to industry analysis.reuters+2

The production rebound came against a backdrop of structural change within the group. The United Arab Emirates formally exited OPEC on May 1, removing roughly 3.2 million bpd of production from the cartel's baseline — the first departure by a top-three producer in the organization's history.kingdomexploration+1

An escalation in hostilities on July 7-8 has since clouded the outlook, with benchmark crude prices rising back toward $77 per barrel after having fallen to $68 in early July.iea