OPEC Cuts 2026 Oil Demand Growth Forecast for Fourth Consecutive Month! Saudi and Russian Output Diverge

The Organization of the Petroleum Exporting Countries (OPEC) on Wednesday (12th) cut its 2026 global oil demand growth forecast for the fourth consecutive month, yet maintained a more optimistic outlook than the International Energy Agency (IEA) regarding the impact of the U.S.-Iran conflict. Meanwhile, Saudi Arabia's crude oil production surged in July, while Russia's output fell nearly one million barrels per day below the OPEC+ production quota due to Ukraine's sustained attacks on energy facilities.

In its latest monthly report, OPEC forecast global oil demand in 2026 to increase by 580,000 barrels per day—marking the fourth consecutive downward revision. Despite this, OPEC still expects demand to grow, contrasting sharply with the IEA's prediction of a contraction in demand this year, highlighting a clear divergence between the two major institutions on how the U.S.-Iran war, high oil prices, and supply constraints will impact consumption. OPEC also raised its forecast for oil demand growth in 2027.

On the supply side, Saudi Arabia reported to OPEC that its crude oil output rose from 7.1 million barrels per day in June to 8.2 million barrels per day in July—an increase of over 1.1 million barrels per day in a single month—reflecting Gulf oil producers gradually resuming production during the brief U.S.-Iran ceasefire, although output remains millions of barrels below pre-war levels.

Notably, Saudi Arabia's reported production is approximately 780,000 barrels per day higher than the volume actually supplied to the market, indicating that some crude is being diverted into domestic inventories amid disrupted export routes. According to IEA estimates, Saudi Arabia's domestic crude inventories had risen to their highest level since at least 2016 by early August.

After the U.S.-Iran ceasefire collapsed and hostilities resumed, the Strait of Hormuz and the Bab el-Mandeb Strait—two key Saudi export routes—once again came under threat. Nevertheless, Middle Eastern oil producers continue to quietly transport large volumes of crude out of the region via shuttle tankers. The seven OPEC members that directly report production data increased output by a combined 1.88 million barrels per day in July, primarily driven by Saudi Arabia and Iraq.

In contrast, Russia's average crude oil production in July was 8.887 million barrels per day, a slight decrease of 6,000 barrels per day from June, and approximately 937,000 barrels per day below the OPEC+ quota of 9.824 million barrels per day. Russia's output has significantly lagged behind its target as Ukraine continues daily attacks on its refineries, tankers, and export facilities.

In the first half of July, Ukraine concentrated attacks on Russian refineries, forcing refining activity to multi-year lows and pushing seaborne crude exports to near historic highs. In the second half, the focus shifted to tankers in the Black Sea and the Sea of Azov, giving refineries brief windows for repairs, allowing processing volumes to rebound and exports to decline. So far this month, Ukraine has attacked nine out of Russia's 34 major refineries, further intensifying geopolitical pressures on global oil supply.