14/04/2026 04:21 AST
OPEC on Monday lowered its forecast for world oil demand in the second quarter by 500,000 barrels per day, the producer group's monthly oil report showed in its first public assessment of the Iran war's impact on the market. OPEC sees a smaller hit to oil demand from the war this year than some other forecasters, such as the US government's Energy Information Administration. OPEC also made no change to its full-year outlook as it sees consumption rebounding in later months.
The war has effectively closed the Strait of Hormuz, the world's most important oil route, shutting in millions of barrels of Middle East production and sending fuel prices soaring. The price surge is pressuring consumers and businesses across the globe, and triggering government action to conserve supplies. Global oil demand is projected to average 105.07 million bpd in the second quarter, OPEC's report said, down from the 105.57 million bpd forecast in last month's report.
"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 said, referring to countries inside or outside the Organization for Economic Co-operation and Development grouping of industrialized nations.
OPEC+ oil output plunges in March
OPEC kept unchanged its forecast that world oil demand will rise by 1.38 million bpd in 2026, in contrast to the EIA which halved its prediction in an April 7 report. OPEC+, which includes the Organization of the Petroleum Exporting Countries plus other producers such as Russia, had agreed to resume oil production hikes as of April, although the report highlighted how steeply output has fallen since the Iran conflict began at the end of February.
Crude oil output by OPEC+ averaged 35.06 million bpd in March, down 7.70 million bpd from February, citing secondary sources, the report showed, with Iraq and Saudi Arabia making the biggest cuts. OPEC+ agreed on April 5 to raise its oil output quotas by 206,000 bpd for May, a modest rise that will largely exist on paper as long as key members are unable to raise production due to the effective Hormuz blockage.
Meanwhile, oil prices surged back above $100 a barrel and stocks fell Monday as investors awaited a looming US deadline on a blockade of the Strait of Hormuz, ratcheting up fears for Middle East energy supplies. The resurgent geopolitical tensions come after ceasefire talks between Washington and Iran broke down over the weekend, dousing hopes for a lasting end to a war that has threatened economies worldwide.
Traders say the prospect of widespread inflation from spiking oil prices and supply disruptions has also put a focus on corporate earnings, with a range of blue chips this week starting to report first-quarter results. On Friday, the US reported that its consumer price index climbed to 3.3 percent in March, the highest level since May last year.
"The stagflation word is being widely aired once again as geopolitical turmoil threatens to stymie international growth and stoke inflationary pressures," said Russ Mould, investment director at AJ Bell.
World oil prices jumped around seven percent Monday, while stocks on Wall Street opened lower, in line with losses across Asia and Europe.
"Reopening the Strait of Hormuz remains the key requirement for reigniting a sustainable rally across risk assets," said David Morrison, an analyst at Trade Nation. "Yet there's also a conviction, rightly or wrongly, that the war will end relatively soon," he said, noting that oil futures contracts for deliveries later this year are currently priced well below current market prices. "As far as oil traders are concerned, this war may be in its seventh week, but it should be resolved by summer," Morrison said.
Kuwait Times
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