OPEC cut its oil demand growth forecast to 400,000 bpd from 1.4 million bpd. Oil prices stay elevated anyway, with WTI above $92, because Middle East supply risks outweigh the weaker demand outlook.
OPEC cut its oil demand growth forecast to 400,000 bpd, down from the 1.4 million bpd the bloc projected at the start of the year. The OPEC downgrade covers this year's demand.
OPEC secretary general Haitham Al Ghais said the downgrade reflects developments in the oil market throughout the year. The bloc still expects some of the deferred demand to materialise some time in 2027, which points to a recovery in consumption next year.
Prices have not followed demand lower. Brent crude is above $105 and WTI is back above $92 today, largely because of ongoing tensions in the Middle East.
The latest attacks on oil tankers near the Strait of Hormuz and a Houthi strike on Saudi Arabia's Riyadh airport over the weekend show tensions are still running high. As a result, the oil market has to stay cautious, because disruptions to shipping flows could worsen at any time.
Until Middle East developments improve materially, the OPEC downgrade is a tough basis for a more bearish view on oil prices. The demand outlook may be weakening, but supply risks are still driving the market for now.
Source: investingLive
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