On Thursday, oil prices advanced as OPEC revised down its demand outlook for the year, while the International Energy Agency cautioned of heightened market volatility ahead. The July contract for the international benchmark Brent crude rose 0.34% to $105.99 per barrel, while the June contract for U.S. WTI crude increased 0.43% to $101.45 per barrel.
In its latest monthly report, OPEC lowered its projection for 2026 oil demand growth to approximately 1.2 million barrels per day, down from a previous estimate of 1.4 million barrels per day. OPEC's oil production in April declined by 1.7 million barrels per day. Since the conflict in Iran erupted at the end of February, cumulative production has fallen by over 30%, equating to a reduction of 9.7 million barrels per day.
It is anticipated that OPEC's most recent data release will be the final one to include figures from the United Arab Emirates, which withdrew from the organization on May 1.
The International Energy Agency also underscored the impact of the Iran conflict on oil supplies in a report on Wednesday. The IEA stated, "More than ten weeks into the Middle East conflict, the loss of oil supplies through the Strait of Hormuz continues to intensify, depleting global oil inventories at a record pace."
The agency noted that total losses for Gulf producers have now exceeded 1 billion barrels due to supply reductions surpassing 14 million barrels per day. It added that price volatility is likely to increase 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 linked 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 from May through June.
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