OPEC maintains unchanged global oil demand outlook; market closely monitors the course of Middle East conflict

On Wednesday local time, OPEC maintained its forecast for global oil demand, while ongoing conflicts in the Middle East continue to severely disrupt oil flows in the Gulf region, forcing major oil-producing countries to cut production.

In its latest monthly report, OPEC expects global oil demand to increase by 1.34 million barrels per day in 2027, slightly below the 1.38 million barrels per day increase projected for 2026, supported by a steady global economy.

The report states: “Various factors are expected to support global economic growth in the near term, but trade-related dynamics, geopolitical situations, and their impacts need close monitoring.” However, OPEC did not comment specifically on the Middle East conflict.

Since the outbreak of war in Iran on February 28, oil prices have been highly volatile. Brent crude, the global benchmark, briefly rose close to $120 per barrel earlier this week, then fell back below $90 per barrel.

During Wednesday’s U.S. trading session, Brent crude hovered around $91 per barrel, while U.S. WTI futures were slightly below $86 per barrel.

For many OPEC+ members, the Strait of Hormuz is a critical route for transporting oil to Asian buyers, which is currently effectively closed, and regional energy infrastructure has also suffered direct hits. Major oil producers including Kuwait and Iraq have begun reducing output, while Saudi Arabia is rerouting crude oil to alternative routes.

Meanwhile, to address supply disruptions caused by the Iran conflict, the International Energy Agency (IEA) agreed on Wednesday to release 400 million barrels from oil reserves, the largest coordinated release in the agency’s history.

However, market observers warn that this move may only provide temporary relief and could even temporarily boost oil demand.

A bigger concern remains the disruption of oil flows. Experts say that even if Strait transportation resumes, redeploying tankers, reloading storage facilities, and restarting oil fields could take several weeks.

In February, OPEC oil production increased by 164,000 barrels per day to 28.63 million barrels per day; meanwhile, total OPEC+ production surged by 445,000 barrels per day to 42.72 million barrels per day, mainly due to a rebound in Kazakhstan’s output.

Earlier this month, OPEC and its allies agreed to implement higher-than-expected production increases in April. As the de facto leader of the alliance, Saudi Arabia also raised official crude oil prices for all regions.

In February, Saudi Arabia significantly increased oil output in preparation for potential military strikes by the U.S. and Israel against Iran. Sources said that at the time, Saudi’s increased production and exports were part of an emergency plan to counter possible U.S. strikes and to prevent disruptions to Middle Eastern oil supplies.

OPEC also stated that oil supply from non-OPEC+ countries is expected to increase by 610,000 barrels per day in 2027, below the 630,000 barrels per day forecast for this year. New supplies will come from Brazil, Canada, Qatar, and Argentina.

(Source: Cailian Press)