OPEC on Thursday lowered its 2026 global oil demand growth forecast to 970,000 barrels per day, marking the second consecutive monthly downward revision, according to the group’s latest monthly report. The new projection cuts the previous estimate by 200,000 barrels per day.
OPEC trims 2026 demand growth forecast to 970,000 bpd
The revision pulls the 2026 projection down from the 1.17 million barrels per day OPEC had forecast just a month earlier. That 200,000 bpd reduction reflects the group’s updated read on how the ongoing conflict in Iran is reshaping global energy consumption patterns.
This is the second downward revision in as many months. OPEC has been steadily pulling back its near-term demand expectations as the consequences of the Iran conflict continue rippling through global energy markets.
At the same time, OPEC raised its 2027 demand growth forecast by 190,000 bpd, lifting that projection to 1.73 million bpd. The group appears to be signaling that it views any consumption shortfall as temporary rather than structural.
Iran conflict and Hormuz closure drive the downward revision
The central factor behind the revised forecast is the conflict in Iran, which has effectively closed the Strait of Hormuz—one of the world’s most critical oil transit routes. Its closure has cut off millions of barrels of Middle Eastern output from global supply chains, with no clear timeline for resolution.
Fuel prices have climbed as a result. Consumers and businesses worldwide are absorbing those higher costs, which weighs on economic activity and suppresses oil demand in turn.
OPEC+ had agreed earlier this year to resume output increases starting in April. The Hormuz closure made it physically impossible to follow through on those planned production hikes, directly constraining the group’s ability to manage supply.
Iran’s position within OPEC+ has been particularly affected—the country posted the largest output drop among all OPEC+ members in May, with exports falling sharply due to a U.S. blockade, according to tanker tracking data cited in the report.
OPEC+ collective output falls 190,000 bpd in May
OPEC+ crude production averaged 33.13 million barrels per day in May, a decline of 190,000 bpd compared with April. Those figures were drawn from the secondary sources OPEC uses to monitor member production.
The May total includes output from the United Arab Emirates, which formally departed both OPEC and OPEC+ on May 1. That exit adds a layer of complexity to how the group’s collective production figures will be tracked and interpreted going forward.
Higher energy costs feed into transportation, manufacturing, and consumer goods—compounding the economic strain already tied to geopolitical instability across the Middle East. The pressure extends well beyond the oil sector itself. Even so, OPEC left its global economic growth forecasts unchanged, describing first-half 2026 performance as “resilient” while acknowledging the geopolitical tensions weighing on the broader outlook.
OPEC’s outlook diverges from EIA and IEA projections
OPEC’s revised forecast still stands at odds with assessments published by other major energy institutions. Both the U.S. Energy Information Administration and the International Energy Agency project an outright decline in global oil demand in 2026—a considerably more pessimistic view than OPEC’s projection of modest growth.
The gap reflects a fundamental difference in how these organizations are modeling the Iran conflict’s economic and energy impact. OPEC sees a smaller near-term consumption effect than either the EIA or the IEA does.
The group’s higher 2027 demand growth estimate reinforces that interpretation—treating the current disruption as a temporary shock, with consumption expected to recover once conditions stabilize rather than viewing the conflict as a catalyst for lasting structural change.
That divergence carries real consequences. When major forecasters disagree this sharply, the uncertainty itself becomes a market factor, shaping how producers, traders, and policymakers plan.
Elevated fuel prices
OPEC has now cut its 2026 oil demand growth forecast twice in a row, bringing the projection to 970,000 bpd—200,000 bpd below last month’s estimate. The Iran conflict and the closure of the Strait of Hormuz are the primary drivers, curbing both Middle Eastern output and global consumption through elevated fuel prices.
OPEC+ collective output fell 190,000 bpd in May to 33.13 million bpd, with Iran recording the steepest decline among members. The group still expects demand to rebound in 2027, raising that forecast by 190,000 bpd to 1.73 million bpd. Neither the EIA nor the IEA shares that optimism—both project an outright demand decline this year, leaving significant uncertainty over where global oil consumption is actually headed.
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