On Thursday, oil prices advanced as the International Energy Agency cautioned of heightened volatility ahead, while OPEC revised down its demand outlook for the current year. The international benchmark Brent crude futures for July delivery rose 0.34% to $105.99 per barrel; U.S. WTI crude futures for June delivery increased 0.43% to $101.45 per barrel.
In its latest monthly report, OPEC reduced its projection for 2026 oil demand growth to approximately 1.2 million barrels per day, down from a prior estimate of 1.4 million barrels per day. OPEC's oil output in April declined by 1.7 million barrels per day. Since the onset of conflict involving Iran in late February, cumulative production has dropped by more than 30%, equating to a reduction of 9.7 million barrels per day. The most recent data release from OPEC is anticipated to be the final report including figures from the United Arab Emirates, which exited the organization on May 1.
The International Energy Agency, in a Wednesday statement, also underscored the impact of the Iran conflict on oil supplies. The agency noted, "More than ten weeks into the Middle East conflict, mounting oil supply disruptions in the Strait of Hormuz are depleting global oil inventories at a record pace." It further stated that total losses for Gulf producers have now surpassed 1 billion barrels due to supply reductions exceeding 14 million barrels per day, adding that price volatility could intensify as the peak summer demand season approaches.
Analysts at ING commented in a report, "The duration of elevated fuel prices remains a key topic of discussion, closely tied to the ongoing geopolitical situation stemming from the closure of the Strait of Hormuz, as well as potential damage to oil and gas infrastructure from further conflict in the Middle East."
Among the three major agencies, the U.S. Energy Information Administration presented the most pessimistic systemic forecast, directly halving its demand growth expectation for 2026. The U.S. government's energy statistics department predicts that global oil inventories will be drawn down at an extraordinary rate of 8.5 million barrels per day in the second quarter of this year. It also anticipates that Brent crude prices will remain firmly anchored around the $106 per barrel level during the May to June period.
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