OPEC has elevated its global oil demand forecast for the upcoming year while reducing its projection for supply growth from the United States and other producers outside the broader OPEC+ group, indicating a tighter market.
The anticipation of increased demand and a decline in supply growth from outside OPEC+, which includes OPEC alongside Russia and other allied nations, would facilitate OPEC+’s strategy to enhance production to reclaim market share following years of cuts intended to stabilize the market.
According to a monthly report from the Organization of the Petroleum Exporting Countries, world oil demand is expected to grow by 1.38 million barrels per day in 2026, reflecting an increase of 100,000 bpd from the prior forecast. The projections for this year remained unchanged.
These forecasts sit at the upper end of the industry spectrum, as the agency predicts a slower energy transition compared to some other forecasters, such as the International Energy Agency, which anticipates a mere 700,000 bpd increase in global demand this year.
In the same report, OPEC marginally raised its forecast for global economic growth this year to 3.0% as U.S. President Donald Trump’s administration finalizes several trade agreements, with the economies of India, China, and Brazil exceeding expectations.
Analysts note that the decline in oil prices this year, partly attributed to OPEC+ output increases and concerns regarding U.S. tariffs, has exerted pressure on the economics of U.S. shale production.
Reduced supply growth outside OPEC+
OPEC’s report indicated that U.S. output of tight oil, a term synonymous with shale, is projected to decrease by 100,000 bpd in 2026 compared to last month’s forecast of stable output year-on-year.
Overall, oil supply from nations outside OPEC+ is expected to rise by around 630,000 bpd in 2026, a reduction from last month’s estimate of 730,000 bpd.
While the U.S. is still projected to be a significant contributor to this growth, OPEC now anticipates that U.S. total oil output will increase by approximately 130,000 bpd next year, down from a January forecast of 510,000 bpd.
The report also revealed that in July, OPEC+ increased crude output by 335,000 bpd, slightly below the 411,000 bpd rise called for by the group’s July quotas.
Market reactions to the report were mixed, with oil prices experiencing a slight dip post-release as traders awaited additional data from U.S. government reports. Nevertheless, the overall outlook suggests a strengthening market bolstered by economic resilience and constrained supply growth from rivals amidst ongoing geopolitical and trade uncertainties.
Record U.S. crude production ahead
U.S. crude production is projected to reach a record 13.41 million barrels per day in 2025, driven by enhancements in well productivity. However, a decline in oil prices is expected to lead to a decrease in output in 2026, as forecasted by the Energy Information Administration in a monthly report released.
The anticipated drop in 2026 production to 13.28 million bpd would mark the first reduction in output since 2021 for the world’s largest producer, according to EIA data. The average price for the international benchmark Brent is expected to be $51 per barrel next year, down from the EIA’s earlier estimate of $58 per barrel, following the decision by the Organization of the Petroleum Exporting Countries and its members to accelerate production increases.
In last month’s report, the EIA had estimated U.S. crude output at 13.37 million bpd for both 2025 and 2026. The United States produced 13.21 million bpd in 2024. U.S. producers this year have had to navigate President Donald Trump’s fluctuating tariffs, which have caused economic uncertainty, rising supply quotas from OPEC+, and ongoing conflicts in the Middle East and Ukraine.
The EIA stated that lower crude prices are anticipated to reduce retail prices for petroleum products, forecasting that retail gasoline prices in the U.S. will average less than $2.90 per gallon next year, approximately 20 cents per gallon lower than this year.
