Has the oil market reached a 'turning point'?

Amrita Sen pointed out that oil flows through the Strait of Hormuz briefly rebounded in August, but as tensions flared up again, shippers resumed exercising caution. She warned that if cancellations and delays at the Strait of Hormuz persist, Asian refiners will have no choice but to cut refinery runs. According to Shanghai Observer News, clashes between Yemen’s Houthi forces and the Saudi-led coalition have escalated across multiple fronts, with Saudi Arabia suffering attacks—marking a major escalation in the Yemen conflict and serving as the immediate catalyst for the recent sharp rise in global oil prices. On September 10, NYMEX WTI crude futures surged 6.69% in a single day, closing at $102.48 per barrel; London-traded Brent crude rose 6.34%, closing at $107.63 per barrel—both hitting their highest levels since May 19 and registering their largest one-day gains in nearly two months. Although prices retreated roughly 3% on Friday (September 11) amid rumors of a 'temporary Hormuz agreement,' both Brent and WTI posted weekly gains exceeding 9%, marking their second consecutive week of over-9% weekly gains. Refined Products Market: Quieter—but More Dangerous—Pressure If the surge in crude oil prices has drawn widespread attention, the tension in the refined products market runs even deeper. According to the International Energy Agency (IEA), 'the rise in crude oil prices pales in comparison to the surge in refined product prices—the most strained segment of the market today is refined products.' Disruptions to shipping through the Strait of Hormuz, coupled with Ukraine’s strikes on Russian refining facilities, constitute a 'dual shock'—exacerbating supply pressures on refined products far beyond those affecting crude oil itself. The U.S. national average retail diesel price surged past $6 per gallon for the first time on Thursday. Energy policy advisor Kate Gordon noted that fuel costs account for as much as 30% of U.S. food prices: 'Farmers and trucking companies are already absorbing substantial cost increases, but as the war drags on, they will increasingly pass these price pressures on to consumers.' The IEA stated in its report that the ongoing stalemate in U.S.-Iran negotiations delays normalization of crude oil flows until next year, and forecasts a rebound in oil demand in 2027—'barely offsetting this year’s losses.' Markets remain deeply in backwardation, reflecting traders’ bets that the White House will implement some form of policy intervention to ease oil price pressures. Analysts argue that with diesel prices surging and Hormuz Strait throughput dropping into single digits, the transmission path of inflationary pressure toward next week’s Federal Reserve monetary policy meeting has become unmistakably clear. Meanwhile, OPEC has once again downgraded its 2026 demand growth forecast to 380,000 barrels per day—but physical markets are unmoved: Dated Brent spot prices briefly breached $120 per barrel before Friday’s pullback. Domestic Market Linkage: Futures Price Volatility Triggers Regulatory Intervention The sharp volatility in international oil prices rapidly transmitted to China’s domestic market, prompting a series of regulatory responses. According to China Securities Journal, since September, both Brent and WTI crude futures front-month contracts have risen more than 17% cumulatively, while China’s domestic crude futures front-month contract price has also climbed above 800 RMB per barrel. Notably, domestic crude futures prices temporarily exceeded Brent crude futures prices—an abnormal price spread signaling that domestic market pricing has already fully reflected expectations of supply tightness.

Warning! OPEC Secretary-General raised… at the World Petroleum Congress.

Viewpoint One: Global oil & gas industry-wide investment is broadly insufficient; yet it must be recognized that investment decisions across the oil & gas value chain take 5–7 years to translate into actual capacity—requiring long-term planning. Global primary energy demand is projected to grow 23% by 2050 compared to current levels, necessitating forward-looking investment. Q: Has the world underinvested in downstream industries over the past decade? A: I believe global oil & gas investment is insufficient across the upstream, midstream, and downstream segments—and downstream underinvestment is indeed real. Today’s pressure on diesel and jet fuel prices is a direct consequence. For years, OPEC has been issuing related warnings. Anyone reviewing OPEC’s reports and public statements will find repeated emphasis on the necessity of sustained industry investment. Latest forecasts indicate cumulative investment needs across the global oil & gas upstream, midstream, and downstream sectors will reach approximately $18 trillion from now through 2050—equivalent to about $70 billion annually. Numerous refining facilities in North America, Europe, and Japan have been progressively shut down; new refining capacity has long been concentrated in China, and is now expanding steadily in India and the Middle East as well. One critical point many overlook: whether upstream exploration and development or downstream refining, investment decisions made today require 5–7 years before actual capacity comes online. A shortage today cannot be instantly resolved by building a new refinery tomorrow. This sector’s long construction timelines demand long-term planning. Unfortunately, people often get swept up in short-term turbulence and neglect long-term trends. Looking ahead, global population is projected to increase by nearly 2 billion by 2050—with the vast majority of growth occurring in developing countries. Urbanization will bring 1.8 billion people into cities. Assuming global GDP grows at an average annual rate of 3%, the world economy will double in size relative to today. Between 2026 and 2030 alone, over 500 million people will move into new urban centers. Riyadh’s population has just surpassed 10 million—meaning we’ll need to build the equivalent of 50 new cities the size of Riyadh in just a few years. Consider the airports, automobiles, schools, hospitals, and infrastructure required—all dependent on petroleum products. Moreover, everyone talks about artificial intelligence, data centers, and so on—each consuming enormous amounts of energy. Returning to your question: OPEC member states continue investing in oil & gas industries and infrastructure to build an 'insurance buffer' for energy security, while also diversifying into other energy sources. We project that global primary energy demand will rise 23% by 2050 versus today’s level—requiring contributions from all energy sources. The tightening supply situation for diesel, jet fuel, and gasoline was foreseeable; it was only a matter of time—and we have issued warnings for many years.

OPEC cuts 2026 oil demand growth forecast to 400,000 bpd, sees pent-up demand in 2027

Oct 12, 2026

OPEC has revised down its 2026 oil demand growth forecast to 400,000 barrels per day from 1.4 million bpd. The organization anticipates the deferred demand will materialize in 2027.

reuters

OPEC cuts 2026 oil demand growth forecast to 400,000 bpd, sees pent-up demand in 2027

FAQ