OPEC has cut its oil demand growth forecast for 2026 once again, reflecting a market increasingly focused on oversupply risks rather than shortage concerns. In its latest monthly report, the producer group lowered expected demand growth by 190,000 barrels per day from its previous estimate, now expecting an increase of 780,000 barrels per day this year.
The downward revision comes as crude production recovers across the Gulf, supported by the reopening of the Strait of Hormuz. In June, OPEC+ output rose by around 3 million barrels daily compared to May, averaging 36.28 million barrels per day. This surge does not stem from new production capacity but from the resumption of exports that had been delayed due to earlier export bottlenecks and storage constraints caused by regional conflict.
Production gains from major Gulf producers underpin this recovery. The United States continues to produce near 14 million barrels daily. Meanwhile, the UAE, recently leaving OPEC, hit record output of 4.1 million barrels per day in June while increasing exports through Fujairah. Saudi Arabia, Kuwait, Iraq, and Iran have also brought back offline barrels as shipping conditions improved, speeding supply restoration. Yet, these supply rebound efforts face a market where demand is not keeping pace.
Despite trimming its 2026 forecast, OPEC remains cautiously optimistic about global economic growth prospects during the latter half of the year, which could support stronger energy consumption if geopolitical tensions ease and trade flows further stabilize. However, shipping volumes through the Strait of Hormuz remain well below pre-conflict levels, insurance premiums for tankers stay high, and ongoing military threats to energy infrastructure continue to pose risks.
This dynamic has created a paradox for OPEC: after struggling to meet production targets when Hormuz was largely closed, the group now faces the challenge of aligning increasing output with slower-than-expected demand growth. Meanwhile, OPEC raised its demand growth projection for 2027 by 210,000 barrels per day, suggesting expectations of a stronger recovery beyond this year.