OPEC has revised down its global oil demand growth forecast for this year to 180,000 barrels per day, compared with a previous estimate of 380,000 barrels per day.

Due to escalating attacks on Gulf shipping and Houthi strikes on Saudi Arabia adding new regional supply risks, the Organization of the Petroleum Exporting Countries (OPEC) has once again cut its global oil demand growth projection for this year.

The producer group now expects global oil demand to grow by 180,000 barrels per day, down from the earlier forecast of 380,000 barrels per day.

However, driven by factors such as restocking demand after oil inventories were depleted during the Iran war, OPEC has raised its demand growth forecast for next year from 2.36 million barrels per day to 2.55 million barrels per day.

The closely watched monthly report was released as oil prices fell back on Tuesday after rising for three consecutive trading sessions. The front-month contract for global benchmark Brent crude dropped 1.7% to $104.86 per barrel, while West Texas Intermediate futures fell 1.5% to $92.32 per barrel.

A string of attacks on vessels in the Strait of Hormuz, deadly Houthi strikes on Saudi Arabia, and sharply rising freight rates have kept the geopolitical risk premium elevated. OPEC+ ministers said on Monday that shipping and insurance costs have climbed to unprecedented levels, exceeding one-third of the value of the commodities being transported.

Driven by output from Saudi Arabia and Iraq, crude production by OPEC member states rose by 920,000 barrels per day in September to 25.09 million barrels per day. According to the latest OPEC data, Saudi Arabia, the de facto leader of OPEC, increased its daily output by 2.1 million barrels to 8.37 million barrels.

Earlier this month, core members of the OPEC+ alliance agreed to keep crude output unchanged in November. Data from energy data firm Kpler shows that oil shipments through the Strait of Hormuz remain well below pre-war levels. The average verified volume over the past week was 9.7 million barrels per day, down about 43% from 17.1 million barrels per day before the conflict.

Tanker attacks continue to escalate, causing significant volatility in daily shipping data. The latest figures are preliminary estimates and may be subject to upward revisions.

The Strait of Hormuz is a critical chokepoint for the global energy market, handling about one-fifth of the world's oil and liquefied natural gas shipments before the war. Some tankers are transiting with their transponders turned off, making it still difficult to accurately measure the actual volume of crude oil shipped through the waterway.

Alternative export routes are helping to offset the impact of supply disruptions. Kpler said that when shipments from Gulf of Oman and Red Sea terminals are included, the average regional oil shipment volume over the past week was 17.6 million barrels per day, about 24% below pre-war levels. Saudi Arabia has restarted exports from ports on both its east and west coasts. Loading volumes at terminals in Fujairah in the UAE and in Oman are above pre-war baselines.

Although major Middle Eastern producers have increased crude supply in recent weeks, the spot market continues to show severe signs of supply tightness. Constrained by more complex logistics, refined product exports from the Persian Gulf are recovering more slowly than crude.

Crude oil can be shipped in large volumes and supports ship-to-ship transfers at sea, but refined products such as gasoline, diesel, and jet fuel require separate storage, specialized vessels, and more complex scheduling arrangements.

Kpler analyst Sumit Ritolia said that damage to regional refining facilities, continued attacks on infrastructure, and insufficient storage capacity are also dragging down the export recovery. When refineries have no spare space to store refined products awaiting export, they may be forced to cut processing even if their units can operate normally. Meanwhile, ship-to-ship transfers of refined products take longer, are harder to coordinate, and cargoes are more vulnerable to supply disruptions.

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