Oil demand, market resilience and Iraq’s energy ambitions

Key takeaways:

• OPEC’s demand growth forecast has fallen from around 1.4 million barrels per day in January to roughly 800,000 barrels per day, bringing it closer to the IEA’s outlook.

• Higher prices have weighed on consumption, raising questions over how much demand could return if prices ease and how much has been permanently lost.

• Markets remain relatively calm because neither side has abandoned negotiations, suggesting recent actions are more likely to support diplomatic pressure than signal a return to full-scale conflict.

• Ongoing uncertainty continues to generate short-term price volatility, but markets are increasingly distinguishing between geopolitical headlines and actual supply disruptions.

• Oil continues to flow through the Strait of Hormuz despite heightened tensions, reflecting the resilience of global energy trade.

• Middle Eastern producers are continuing to develop alternative export routes, gradually reducing their long-term dependence on the Strait of Hormuz.

• Proposed transit charges through the Strait could increase shipping costs, but their practical impact remains uncertain and is unlikely to deter companies from using the route if implemented.

• Any attempt to impose transit charges through the Strait of Hormuz also raises broader questions regarding international maritime law.

• Iraq is seeking greater US investment to increase oil production, reduce gas flaring, develop gas resources and improve energy infrastructure.

• Efforts to revive the Kirkuk–Baniyas pipeline form part of Iraq’s wider push to diversify its export routes.

• Many announced agreements remain non-binding, making implementation and commercial viability the key tests.

• Iraq’s push for a higher OPEC quota reflects fiscal pressures and frustration over production constraints imposed during years of conflict and instability.

• Diverging national priorities could either reshape OPEC into a smaller but more cohesive organisation or gradually weaken its collective discipline.

• OPEC’s biggest challenge may no longer be managing the market, but managing its own members.