OPEC keeps oil demand forecast despite supply shocks from Iran war

Yesterday 15:20

By: Dakir Madiha

OPEC keeps oil demand forecast despite supply shocks from Iran war

OPEC has maintained its global oil demand projections even as supply disruptions linked to the war involving Iran shake energy markets. The organization confirmed that Saudi Arabia led a significant increase in production in February, raising output by 250,000 barrels per day in what appears to have been a precautionary move ahead of military strikes against Iran.

A Reuters survey published March 6 found that total OPEC production rose by 530,000 barrels per day in February, reaching 28.87 million barrels per day. Saudi Arabia accounted for nearly half of that increase. Iran, Nigeria and Iraq also boosted output during the month.

Separate data reported by Bloomberg showed Saudi crude shipments climbing to about 7.3 million barrels per day during the first 24 days of February, the highest level since April 2023. The figure represents an increase of more than 400,000 barrels per day compared with January.

Sources cited by Reuters said Saudi Arabia expanded both production and exports as part of contingency planning in case U.S. military action against Iran disrupted oil flows from the Middle East. That scenario unfolded on February 28 when the United States and Israel launched coordinated air strikes across Iran. Israel referred to the campaign as Operation Roaring Lion while Washington labeled its operation Epic Fury.

Iran retaliated by launching missile strikes across Gulf states, a development that effectively halted maritime traffic through the Strait of Hormuz. Before the conflict began, the passage handled about 14 million barrels per day of crude oil shipments.

Despite the market turmoil, OPEC’s March monthly oil market report kept its demand outlook unchanged. The group still expects global oil demand to grow by 1.38 million barrels per day in 2026 and by 1.34 million barrels per day in 2027.

The report did not directly reference the war but acknowledged that geopolitical developments require close monitoring. OPEC said the economic impact of recent events may still be too early to assess.

Oil prices have swung sharply since the strikes began. Brent crude futures surged to nearly $120 per barrel before falling back to around $90 after U.S. President Donald Trump suggested the conflict could end soon. The U.S. Energy Information Administration reported that the Brent spot price rose from an average of $71 per barrel on February 27 to $94 on March 9.

Energy markets are now adjusting to major logistical disruptions. With the Strait of Hormuz effectively closed, Saudi Arabia has redirected exports through Red Sea terminals. Reuters reported that crude shipments through the Red Sea could reach record levels in March.

Fatih Birol, executive director of the International Energy Agency, warned on March 10 that supply constraints in the Middle East are creating growing risks for global energy markets. Several countries are considering coordinated releases from emergency oil reserves to stabilize supply.

Earlier, OPEC+ had already agreed to increase production by 206,000 barrels per day starting in April. Under that plan, Saudi Arabia is expected to raise its production target to about 10.2 million barrels per day.