Oil prices faced directional uncertainty Thursday as traders processed OPEC's revised demand outlook and warnings of increased volatility from the International Energy Agency (IEA).
Market Movements and Forecast Adjustments
Global oil benchmarks saw minor declines on Thursday. This movement occurred as market participants weighed OPEC's updated demand projections against geopolitical supply risks.
- Brent Crude Futures (July): Declined by 0.21% to $105.42 per barrel.
- WTI Crude Futures (June): Fell by 0.16% to $100.87 per barrel.
OPEC's Revised Demand Outlook
In its latest monthly update, OPEC adjusted its growth estimates for 2026. Key figures from the report include:
- Demand Growth Estimate (2026): Reduced to approximately 1.2 million barrels per day (bpd), down from a previous forecast of 1.4 million bpd.
- Production Decline: OPEC production decreased by 1.7 million bpd in April. Overall production has fallen by over 30%, equating to 9.7 million bpd since the start of the conflict in late February.
- Data Scope: This update is anticipated to be the final one incorporating data from the United Arab Emirates, which exited the cartel on May 1.
Geopolitical Risks and Supply Concerns
The IEA issued a warning regarding the impact of the ongoing conflict in the Middle East on global oil supplies. The agency noted:
- Supply Depletion: Mounting supply losses from the Strait of Hormuz are depleting global oil inventories at a record pace.
- Total Loss: The overall supply loss from Gulf producers now exceeds one billion barrels, with more than 14 million bpd cut.
- Volatility Warning: The IEA anticipates greater price volatility as peak summer demand approaches.
ING analysts further linked sustained high fuel prices to two primary factors: the geopolitical situation surrounding the Strait of Hormuz and potential damage to Middle Eastern oil and gas infrastructure from further conflict.
Broader Market Watch
Traders are closely monitoring major geopolitical developments, including the scheduled meeting between U.S. President Donald Trump and Chinese President Xi Jinping. Former U.S. Commerce Secretary Carlos Gutierrez stated that China has an interest in the conflict ending, given its status as a major consumer of oil transiting the Hormuz Strait.
