OPEC raises 2026 global oil demand forecast, US shale oil production expected to decline
2025-08-13 01:09:46
In its latest monthly oil market report, released on August 12, the Organization of the Petroleum Exporting Countries (OPEC) raised its forecast for global oil demand growth in 2026 to 1.38 million barrels per day (bpd), an increase of 100,000 bpd from the previous month. The 2025 demand growth forecast remained unchanged at 1.29 million bpd. OPEC expects global daily oil demand to reach 105.1 million bpd in 2025 and further increase to 106.5 million bpd in 2026. This adjustment is primarily driven by optimistic expectations for global economic growth, particularly trade agreements signed by the Trump administration and the better-than-expected economic performance of India, China, and Brazil. This has prompted OPEC to slightly increase its 2025 global economic growth forecast to 3.0%.
On the supply side, OPEC lowered its forecast for oil supply growth from non-OPEC+ countries (including the United States, Brazil, and Canada) in 2026, projecting an increase of 630,000 barrels per day (bpd), down from the 730,000 bpd projected last month. The report specifically noted that U.S. shale oil production is expected to decline by 100,000 bpd in 2026, reversing the previous forecast of flat production. This is primarily due to continued capital discipline in the producing region, reduced drilling activity, improved efficiency, and increased associated gas production. This assessment is partially reinforced by the U.S. Energy Information Administration (EIA) Short-Term Energy Outlook report released the same day. The EIA projects that U.S. crude oil production will reach a record high of 13.41 million bpd in 2025, but will fall back to 13.28 million bpd in 2026, the first annual decline since 2021.
The EIA's forecast presents a different perspective: its forecast for global daily oil demand in 2025 and 2026 is 103.7 million barrels and 104.9 million barrels, respectively, both lower than OPEC's optimistic expectations; at the same time, it lowered its forecast for Brent crude oil prices, expecting an average price of US$67.22 per barrel in 2025 (previously US$68.89) and a further drop to US$51.43 per barrel in 2026 (previously US$58.48), reflecting concerns about oversupply, with supply surpluses expected to reach 1.64 million barrels per day and 1.44 million barrels per day in 2025 and 2026, respectively.
The dynamics of the OPEC+ alliance are also worthy of attention. Its crude oil production increased by 335,000 barrels per day (bpd) to 41.94 million bpd in July, still falling short of its quota target of 411,000 bpd. Saudi Arabia and the UAE contributed the majority of the increase. This production increase coincides with a complete reversal of OPEC+'s previously planned voluntary production cut of 2.2 million bpd, a year ahead of schedule. Market observers believe its core goal is to regain market share lost to US shale oil. However, the pressure of low oil prices on producers' finances exacerbates the challenge of balancing production and prices.
Energy experts had mixed reactions to the two agencies' forecasts.
Veteran energy analyst Dan Tsubouchi noted that OPEC's optimistic demand forecast contrasts with the more conservative outlooks of the EIA, IEA, and other organizations, suggesting this discrepancy may stem from differing sentiment regarding economic growth. Quantitative trading expert Menthor Q warned that if OPEC+ fails to increase production further, slowing non-OPEC supply growth could lead to a significant inventory draw of approximately 1.2 million barrels per day, further driving a rebound in oil prices, particularly given that CTA funds have already reduced their long positions. S&P CommodityWatch's oil team believes the OPEC+ production jump suggests shifting dynamics within the alliance, while analyst Snehi Shah emphasized that supply and demand fundamentals could drive Brent prices higher.
Judging from the market reaction, Brent crude oil prices remained stable at around US$66 per barrel after the report was released, and investors are still digesting the supply and demand outlook and geopolitical impact.
Overall, the difference in forecasts between OPEC and EIA highlights the uncertainty of the market outlook: the former relies more on economic resilience to support demand growth, while the latter emphasizes oversupply pressure. The potential decline in US shale oil production and OPEC+'s production increase strategy will become key variables affecting future oil price trends.
On the supply side, OPEC lowered its forecast for oil supply growth from non-OPEC+ countries (including the United States, Brazil, and Canada) in 2026, projecting an increase of 630,000 barrels per day (bpd), down from the 730,000 bpd projected last month. The report specifically noted that U.S. shale oil production is expected to decline by 100,000 bpd in 2026, reversing the previous forecast of flat production. This is primarily due to continued capital discipline in the producing region, reduced drilling activity, improved efficiency, and increased associated gas production. This assessment is partially reinforced by the U.S. Energy Information Administration (EIA) Short-Term Energy Outlook report released the same day. The EIA projects that U.S. crude oil production will reach a record high of 13.41 million bpd in 2025, but will fall back to 13.28 million bpd in 2026, the first annual decline since 2021.
The EIA's forecast presents a different perspective: its forecast for global daily oil demand in 2025 and 2026 is 103.7 million barrels and 104.9 million barrels, respectively, both lower than OPEC's optimistic expectations; at the same time, it lowered its forecast for Brent crude oil prices, expecting an average price of US$67.22 per barrel in 2025 (previously US$68.89) and a further drop to US$51.43 per barrel in 2026 (previously US$58.48), reflecting concerns about oversupply, with supply surpluses expected to reach 1.64 million barrels per day and 1.44 million barrels per day in 2025 and 2026, respectively.
The dynamics of the OPEC+ alliance are also worthy of attention. Its crude oil production increased by 335,000 barrels per day (bpd) to 41.94 million bpd in July, still falling short of its quota target of 411,000 bpd. Saudi Arabia and the UAE contributed the majority of the increase. This production increase coincides with a complete reversal of OPEC+'s previously planned voluntary production cut of 2.2 million bpd, a year ahead of schedule. Market observers believe its core goal is to regain market share lost to US shale oil. However, the pressure of low oil prices on producers' finances exacerbates the challenge of balancing production and prices.
Energy experts had mixed reactions to the two agencies' forecasts.
Veteran energy analyst Dan Tsubouchi noted that OPEC's optimistic demand forecast contrasts with the more conservative outlooks of the EIA, IEA, and other organizations, suggesting this discrepancy may stem from differing sentiment regarding economic growth. Quantitative trading expert Menthor Q warned that if OPEC+ fails to increase production further, slowing non-OPEC supply growth could lead to a significant inventory draw of approximately 1.2 million barrels per day, further driving a rebound in oil prices, particularly given that CTA funds have already reduced their long positions. S&P CommodityWatch's oil team believes the OPEC+ production jump suggests shifting dynamics within the alliance, while analyst Snehi Shah emphasized that supply and demand fundamentals could drive Brent prices higher.
Judging from the market reaction, Brent crude oil prices remained stable at around US$66 per barrel after the report was released, and investors are still digesting the supply and demand outlook and geopolitical impact.
Overall, the difference in forecasts between OPEC and EIA highlights the uncertainty of the market outlook: the former relies more on economic resilience to support demand growth, while the latter emphasizes oversupply pressure. The potential decline in US shale oil production and OPEC+'s production increase strategy will become key variables affecting future oil price trends.
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