Oil production among OPEC members continued to decline in April, marking a significant drop of more than 30% since the onset of the Iran conflict in late February. This trend was highlighted in OPEC’s latest monthly report, released Wednesday, which also noted a downward revision in its demand growth forecast for 2026. The new projection estimates an increase of approximately 1.2 million barrels per day (bpd), down from an earlier forecast of around 1.4 million bpd.
The ongoing geopolitical tensions have severely restricted supply from the Persian Gulf, largely attributed to Iran’s blockade of the Strait of Hormuz. In April alone, OPEC production saw a reduction of 1.7 million bpd, following a staggering drop of 7.9 million bpd in March. Cumulatively, OPEC’s total production has plummeted by 9.7 million bpd during the conflict.
The International Energy Agency (IEA) reported that the cumulative supply loss from Gulf oil producers has now surpassed one billion barrels, with over 14 million bpd impacted due to the closure of Hormuz. In contrast to OPEC’s outlook, the IEA anticipates a decrease in oil demand of 420,000 bpd by 2026.
Examining the output from Gulf oil exporters during the Iran war reveals particularly stark declines in production. For instance, Iraq’s output fell by 66%, while Kuwait saw a 76% reduction. Saudi Arabia’s production decreased by 33%, and the United Arab Emirates experienced a 40% decline. Notably, Iranian production saw a decrease of 12% during this period.
Despite these challenges, the actual supply-demand gap may not be as pronounced as it appears, according to the IEA, which indicates that there was a surplus of oil entering 2026. Various measures have been enacted by both producers and consumers to mitigate the impact of these losses. Saudi Arabia and the United Arab Emirates have begun redirecting some exports to ports not affected by the Hormuz blockade. Additionally, oil exports from non-Middle Eastern producers, especially the U.S., have skyrocketed in response to the crisis.
Government and commercial stockpiles have also played a crucial role in alleviating some of the supply constraints. However, these inventories are dissipating at an unprecedented rate, with the IEA reporting a decline of 250 million barrels—equivalent to 4 million bpd—over March and April. As the market approaches the peak summer demand season, the IEA warns that price volatility is expected to increase, highlighting the continued uncertainty and challenges faced by the global oil market.
