OPEC on Monday revised down its projection for world oil demand in the second quarter by 500,000 barrels per day, the organisation said in its monthly oil report - its first public estimate of the market impact of the Iran war. The new figure places Q2 global demand at 105.07 million barrels per day, compared with the 105.57 million bpd forecast in last month’s report.
The producer group said the reduction reflects a slight, transitory weakening in oil consumption growth across both OECD and non-OECD countries, driven mainly by continuing developments in the Middle East. In its own words:
"The demand growth for the second quarter of 2026 is revised down for both the OECD and non-OECD, driven mainly by slight transitory weakness in oil demand growth, given ongoing developments in the Middle East."
OPEC noted that its assessment indicates a smaller hit to annual demand from the conflict than some other forecasters, including the U.S. government’s Energy Information Administration. Despite the Q2 downgrade, OPEC kept its full-year outlook unchanged and continues to project that world oil demand will increase by 1.38 million bpd in 2026, anticipating consumption to rebound in later months.
The report highlighted the severe supply-side disruption that has accompanied the conflict. The war has effectively closed the Strait of Hormuz, a critical chokepoint for global oil shipments, shutting in millions of barrels of Middle East production and contributing to a sharp rise in fuel prices. That price surge has placed pressure on consumers and businesses worldwide and has prompted government measures to conserve supplies.
On the supply side, OPEC+ output fell markedly in March. According to the report's secondary-source estimates, crude oil production by OPEC+ averaged 35.06 million bpd in March, a decline of 7.70 million bpd from February. Iraq and Saudi Arabia accounted for the largest parts of that reduction.
Although OPEC+ agreed on April 5 to raise its production quotas by 206,000 bpd for May, the report cautioned that the modest increase will largely remain on paper so long as key members are unable to physically raise shipments because of the effective Hormuz blockage.
Market context and implications
- OPEC’s downgrade for Q2 captures an immediate reaction to the conflict’s disruption of shipping lanes and regional output.
- The decision to leave the annual demand growth forecast unchanged signals OPEC’s view that the demand slowdown in the middle of the year is temporary and likely to reverse.
- Steep production losses among OPEC+ members have already cut global output substantially, weighing on the group’s ability to deliver on planned quota increases.
The report frames a market in which constrained supply and short-term demand weakness coexist, producing volatility in fuel prices and prompting policy responses to preserve available inventories. The combination of reduced shipments through the Strait of Hormuz and large month-on-month output declines within OPEC+ underpins the elevated uncertainty faced by oil markets at present.