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OPEC Sees Slower Demand Growth Amid Hormuz Strait Supply Cuts

OPEC announced that oil production among its members has fallen by over 30% since the conflict began in late February. This decline is directly attributed to the supply disruptions caused by Iran's blockade of the Strait of Hormuz, which has cut off significant oil flow from the Persian Gulf. Consequently, OPEC has lowered its global demand growth forecast for 2026 to about 1.2 million barrels per day. Furthermore, the International Energy Agency reports that global oil inventories are depleting at a record rate due to these severe supply interruptions.

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OPEC Sees Slower Demand Growth Amid Hormuz Strait Supply Cuts

OPEC reported a significant decline in its members' oil production and subsequently lowered its global demand growth forecast due to supply disruptions stemming from the Strait of Hormuz blockade.

Production Declines Since Iran Conflict

According to the cartel's latest monthly update on Wednesday, oil production among OPEC members experienced a notable drop in April. This decline marks a substantial reduction when compared to levels recorded before the conflict.

  • April Production: OPEC production fell by 1.7 million barrels per day (bpd) in April.
  • March Plunge: This followed a much steeper drop of 7.9 million bpd in March.
  • Cumulative Loss: Overall, production among OPEC members has fallen by more than 30%, totaling 9.7 million bpd, since the start of the war in late February.

Impact of Hormuz Strait Blockade

The primary driver for these supply constraints is the blockade imposed by Iran on the Strait of Hormuz. This action has severely impacted the flow of oil from Persian Gulf producers.

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  • The total cumulative supply loss from Gulf oil producers now exceeds one billion barrels.
  • More than 14 million bpd of supply have been effectively shut down due to the Hormuz closure, according to the International Energy Agency (IEA).

Revised Global Demand Forecast

Due to these supply limitations, OPEC has revised its projections for global oil demand growth.

  • 2026 Forecast: OPEC lowered its demand growth forecast for 2026 to approximately 1.2 million bpd.
  • Previous Estimate: This figure represents a decrease from the previous estimate of about 1.4 million bpd.

Global Inventory Depletion

The combination of mounting supply losses from the Hormuz closure is causing global oil inventories to deplete at a record pace, as noted by the IEA.

  • Inventories saw a drop of 250 million barrels, equating to 4 million bpd, across March and April.
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