Current balance sheets from the three major agencies have not fully captured the impact of the Middle East conflict on crude oil supply and demand. OPEC supply figures for March are expected to face significant downward revisions, while non-OPEC supply may see limited upward adjustments. This year's oil demand growth is also projected to be substantially downgraded, particularly for chemical demand, as disruptions in the Strait have significantly affected exports of LPG and naphtha feedstocks. Additionally, releases from strategic petroleum reserves and lower refinery operating rates will impact the previously projected surplus balance for the year. In the short term, the timing of the Strait's reopening remains a key market focus.
Demand: The EIA estimates 2026 demand growth at 1.23 million barrels per day, up 30,000 bpd from last month's forecast. China's demand is expected to grow by 220,000 bpd, India's by 280,000 bpd, and other Asia-Pacific countries (excluding China, Japan, and India) by 280,000 bpd. U.S. demand growth remains flat, while the Middle East, Africa, and Latin America are projected to grow by 60,000 bpd, 190,000 bpd, and 160,000 bpd, respectively. OPEC forecasts global demand growth for 2026 at 1.37 million bpd, largely unchanged from last month. OPEC expects India to grow by 230,000 bpd, China by 210,000 bpd, the Middle East by 160,000 bpd, Latin America by 130,000 bpd, and Africa by 160,000 bpd. These OPEC projections are considered relatively optimistic. The IEA estimates 2026 demand growth at 640,000 bpd, down 210,000 bpd from last month's forecast. China is expected to contribute 190,000 bpd of growth, India 150,000 bpd, while Japan's demand declines by 30,000 bpd. All demand growth is primarily attributed to developing nations.
Non-OPEC Supply: The EIA projects non-OPEC supply growth for 2026 at 1.16 million bpd (including NGLs), revised up by 100,000 bpd from last month. U.S. supply is expected to increase by 300,000 bpd (revised up by 190,000 bpd), Canada by 80,000 bpd, Brazil by 410,000 bpd, Africa by 30,000 bpd, Norway by 40,000 bpd, and former Soviet Union countries by 20,000 bpd. OPEC's monthly report estimates supply growth from non-alliance countries in 2026 at 630,000 bpd, unchanged from last month, with U.S. supply up 100,000 bpd and Latin America up 430,000 bpd. This estimate is relatively conservative as it excludes alliance countries like Kazakhstan. The IEA projects non-OPEC supply growth (including NGLs) for 2026 at 1.11 million bpd, revised down by 70,000 bpd from last month. U.S. supply is expected to grow by 370,000 bpd, Canada by 80,000 bpd, Norway by 140,000 bpd, Brazil by 320,000 bpd, while Kazakhstan declines by 30,000 bpd and Mexico by 80,000 bpd.
OPEC Production: Under EIA calculations, OPEC production in February increased by 680,000 bpd month-on-month to 29.25 million bpd, up 2.09 million bpd year-on-year, primarily driven by Saudi Arabia. OPEC's own data shows February production at 28.63 million bpd, up 160,000 bpd from January and 1.76 million bpd year-on-year. Non-OPEC alliance countries supplied 14.09 million bpd in February, up 280,000 bpd from the previous month. The IEA reports OPEC February production at 29.25 million bpd, up 690,000 bpd from January and 2.09 million bpd year-on-year.
Call on OPEC: The EIA projects a supply surplus of 1.90 million bpd for 2026, revised down by 1.20 million bpd from last month. The Call on OPEC for 2026 is estimated at 25.50 million bpd, revised up by 260,000 bpd. OPEC forecasts the CODC for full-year 2026 at 42.89 million bpd, revised down by 50,000 bpd. The IEA's Call on OPEC for 2026 is projected at 25.95 million bpd, revised up by 220,000 bpd.
Strategy: Oil prices are currently experiencing high volatility due to geopolitical tensions. Participation in the crude oil market carries elevated risks at present. Utilizing options instruments is recommended to hedge against potential downside.
Risks: Downside risks include de-escalation of Middle East conflicts, reopening of the Strait, and a global economic crisis triggered by energy disruptions. Upside risks include a prolonged closure of the Strait of Hormuz exceeding expectations.
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