OPEC raises its 2026 oil supply forecast and reduces the growth of rivals' supplies
OPEC raised its forecast of global oil demand for next year, and trimmed their estimate for the growth in supply coming from the United States and producers outside the larger OPEC+ Group. This indicates a tighter marketplace.
The prospect of higher demand and a decline in supply growth outside OPEC+ (which groups OPEC, Russia, and other allies) would make it easier to proceed with OPEC+'s plan to pump additional barrels to regain the market share lost after years spent cutting back to support the market.
In a report published monthly, the Organization of Petroleum Exporting Countries (OPEC) said that the world's oil demand would rise by 1,38 million barrels a day in 2026. This is an increase of 100,000 barrels pd over the previous estimate. The expectation for this year was unchanged.
The agency's forecasts are on the high end of industry forecasts, because it expects an energy transition that is slower than other forecasters, such as the International Energy Agency. It expects the world demand to increase by only 700,000 bpd in this year.
OPEC's report also raised its forecast of world economic growth this year slightly to 3.0%, as President Donald Trump signed some trade agreements and the economies in India, China, and Brazil exceeded expectations.
OPEC stated that "economic data at the beginning of the second half 2025 confirms the resilience of global economic growth despite persistent uncertainties relating to U.S. centred trade tensions and broader geographic risks."
Brent crude remained steady at $66 a bar after OPEC released the report. In April, it reached a low of $58 for the first time in four years.
U.S. SHALE TO DROPPED IN 2026
Analysts say that the drop in oil prices, due partly to OPEC+ production increases and concerns about U.S. Tariffs, has placed pressure on U.S. shale's economics.
OPEC+ has told sources that its policy shift of increasing output after years supporting the market by cutting production was partly driven to compete with U.S. shale oil production.
OPEC reported on Tuesday that U.S. tight oil production, also known as shale oil, would decline by 100,000 bpd annually in 2026, compared to last month's forecast of flat output.
"The forecast for 2026 assumes sustained capital disciplines, additional drilling efficiency gains and a weaker momentum of drilling activities, as well as increased associated gas production, in key shale regions," OPEC stated.
OPEC has said that the overall oil supply outside OPEC+ is expected to increase by 630,000 bpd per year in 2026. This is down from its previous forecast of 730,000 bpd.
OPEC expects the U.S. to increase its total oil production by 130,000 bpd in 2019, compared to a January forecast that was 510,000 bpd.
OPEC reported that OPEC+ increased crude production by 335,000 bpd in July. This was slightly less than the increase of 411,000 bpd required by the group to meet its July quotas.
The IEA will release its latest forecasts this Wednesday. (Editing by Kirby Donovan & Jan Harvey)
(source: Reuters)
