OPEC Forecasts Minor Q2 Oil Surplus Ahead of Key Production Decisions

OPEC's Oil Demand and Production Outlook

By Alex Lawler

Impact of Weaker Dollar on Oil Demand

LONDON, Feb 11 (Reuters) - OPEC on Wednesday forecast world oil demand from the OPEC+ group will drop by 400,000 barrels per day in the second quarter, and published data indicating a small surplus in that quarter ahead of a key decision on whether to resume output increases.

Kazakhstan's Contribution to Production Decline

World demand for OPEC+ crude will average 42.20 million bpd in the second quarter, OPEC said in its monthly oil market report on its website, down from 42.60 million bpd in the first quarter. Both forecasts were unchanged from last month's report.

Contrasting Views: OPEC vs. IEA

The OPEC+ group comprising OPEC nations, plus Russia and other allies, began raising output last year after years of cuts, but paused production hikes in the first quarter of 2026 amid predictions of a glut. Eight OPEC+ members meet on March 1 where they are expected to decide whether to resume the hikes in April.

OPEC said world oil demand was gaining support from air travel and road transport, as well as from a drop in the value of the U.S. dollar against a basket of currencies.

WEAKER DOLLAR HELPS

"This decline has made dollar-priced commodities, including oil, cheaper for consumers and provided some additional support for global demand," OPEC said in the report.

OPEC left unchanged its forecasts that world oil demand will rise by 1.34 million bpd in 2027 and by 1.38 million bpd this year. The 2026 forecast is higher than that of other analysts, such as the International Energy Agency.

OPEC+ boosted production last year but output in recent months has fallen. The group pumped 42.45 million bpd in January, down 439,000 bpd from December, driven by reductions in Kazakhstan, Russia, Venezuela and Iran, OPEC said in the report.

Kazakhstan's output, hit by a series of setbacks, last month dropped by 249,000 bpd, making the largest contribution to the overall decline.

SMALL Q2 SURPLUS, FULL-YEAR DEFICIT

Should OPEC+ keep pumping at January's rate in the second quarter and other things remain equal, production would be 250,000 bpd higher than that quarter's demand for OPEC+ crude, according to a Reuters calculation based on the OPEC report.

Over the whole of 2026, however, OPEC's data indicate that production will be less than the demand, according to another Reuters calculation. OPEC expects the demand for its crude in 2026 to average 43 million bpd - also unchanged from last month - or 550,000 bpd more than OPEC+ produced in January. 

This outlook contrasts with the view of the IEA, whose most recent figures imply global oil supply will exceed demand by almost 3.69 million bpd - an amount equal to almost 4% of world demand - this year. 

The IEA's next forecast update is due on Thursday.

(Reporting by Alex Lawler. Editing by Mark Potter)