The OPEC Monthly Oil Market Report (MOMR) for July 2026 was published recently. The last month reported in most of the OPEC charts that follow is June 2026 and output reported for OPEC nations is crude oil output in thousands of barrels per day (kb/d). In the OPEC charts below the blue line with markers is monthly output and the thin red line is the centered twelve month average (CTMA) output.
OPEC 12 output increased by 3051 kb/d from May 2026 to June 2026 with the largest increases from UAE (1642 kb/d), Kuwait (880 kb/d), Iraq (446 kb/d), and Iran (155 kb/d). Saudi Arabia saw a 99 kb/d decrease, Libya had a 22 kb/d increase in output in June and other OPEC nations had small increases or decreases of 10 kb/d or less (collectively they had a 5 kb/d increase in crude output.) The 4 OPEC nations with large increases collectively increased OPEC output by 3123 kb/d with UAE accounting for more than half of this increase. Note that UAE has left OPEC, but OPEC continues to report UAE output as if it were a member. If we omit UAE the OPEC increase in June was only 1409 kb/d.
The chart above shows output from the Big 4 OPEC producers that are subject to output quotas and where most of OPEC spare capacity currently exists (Saudi Arabia, UAE, Iraq, and Kuwait.) Since February 2026 output from the Big 4 fell by 9540 kb/d by April 2026 and has since increased by 3317 kb/d over the past 2 months. OPEC spare capacity has decreased to about 6771 kb/d in June 2026. This spare capacity estimate is 4009 kb/d less than my estimate 2 months ago. I expect the recent closing of the Strait of Hormuz may reduce OPEC output in August and spare capacity from OPEC may increase yet again.
World demand for crude oil dropped from 81.26 kb/d in 2Q2025 to 76.39 kb/d for 2Q2026, a drop of 4.87 kb/d which is about a 6% drop in World demand for crude oil. It may be that draws on commercial product stocks accounts for some of this drop and some may be consumer response to higher fuel prices. In my previous OPEC update from 2 months ago the estimate for crude demand decrease in 2Q2026 was 3.09 Mb/d so this new estimate is significantly higher than 2 months ago. Also note that China and Russia combined saw a 2.31 Mb/d drop in crude input to refinery from 2Q2025 to 2Q2026, about 47% of the World decrease.
OECD commercial oil stocks fell to 48.6 Mb below the 2021-2025 average in May 2026.
For 2026 the average annual forecast for World Demand for liquid fuel was reduced from 2 months ago (May 2026 MOMR) by 400 kb/d in the July 2026 MOMR, demand for 2027 is unchanged. Also the implied stock draw based on the OPEC supply and demand estimates for 1H2026 is 837 million barrels. If World importers of crude oil maintain about a 90 day stock level of crude oil in SPR and commercial stocks combined the at the end of 2025 this would be roughly 4 Gb of crude oil stocks for the World.
If we further assume about 50% of these crude stocks are oil on water, pipeline fill and minimum tank levels, AKA minimum operating level (MOL), this would suggest only 2 Gb of that 90 day crude stock level is useable. About 58% of these useable stocks remain as of June 30, 2026, about 1163 million barrels or 26 days of World average crude imports in 2025. If Hormuz and Red Sea are closed we could see crude stocks run down to MOL in 2 months or less, unclear how high oil prices might rise in that case.
OPEC forecasts a small drop in US tight oil output in 2026 and 2027 with a total decrease in average annual output of 30 kb/d over those 2 years from 2025 to 2027. The recent Short Term Energy Outlook from the EIA has average annual tight oil output at 9.36 Mb/d in 2025, 9.40 Mb/d in 2026, and 9.66 Mb/d in 2027. Given the recent problems with shipping crude oil out of the Middle East and the potential for high oil prices, perhaps the higher estimates from the EIA will prove correct.
Future Permian output will depend on oil and natural gas prices at least in part. Under a low oil price scenario and low natural gas price scenario (under $75/b for oil and under $3/MCF for natural gas in the Permian Basin), I have the following scenario for the Permian Basin, note that after June 2026 the “data” is based on the STEO forecast for Permian tight oil.
The scenario spreadsheet is at this link.
For a higher oil and natural gas price scenario (oil over $100/b and natural gas over $5/MCF in the Permian Basin) we might see higher Permian output as in the scenario below.
The spreadsheet for this high price scenario is at this link.
Note that these two scenarios are chosen from an infinite set of possible future scenarios, odds that either is correct is exactly zero.
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