Key insights
- OPEC lowered its 2026 global oil demand growth forecast due to the Iran war and Strait of Hormuz disruptions. While 2027 demand is revised upward, near-term supply chain issues and elevated shipping costs could contribute to inflationary pressures, negatively impacting US equities. The geopolitical risk adds uncertainty.
Investing.com - The Organization of the Petroleum Exporting Countries has slashed its forecast for global oil demand growth this year, in the latest reflection of lowered expectations because of the Iran war.
OPEC said it now expects world oil demand to increase by 1.7 million barrels per day, compared to a prior forecast of 1.38 million bpd, according to a report posted on the group’s website.
Demand in Europe and Asia Pacific, two regions heavily exposed to tanker supply disruptions caused by the effective closure of the Strait of Hormuz, is anticipated to slide by 0.03 million bpd and 0.08 million bpd, respectively.
But oil demand in 2027 is seen growing by about 1.5 million bpd year-on-year, an upward revision of around 0.2 million bpd from a previous outlook last month.
The Strait of Hormuz has been all but shuttered to tanker traffic shortly after the U.S. and Israel launched a joint assault on Iran in late February. Both the U.S. and Iran have now established their own individual blockades of the waterway, and, despite a fragile ceasefire, remain at odds over a long-term peace agreement.
In April, OPEC said the shifting of trade routes to avoid the strait caused crude oil shipping costs to fall from record highs in many regions despite staying elevated in the Middle East, though costs remained significantly higher than last year. Conversely, demand for refined fuel transport rose, driving up clean tanker rates in the Mediterranean and Asia.