Abu dhabi: The OPEC Monthly Oil Market Report (MOMR) for July anticipates that near-term economic activities in the Middle East will remain robust, driven primarily by the non-oil sector, which is a key contributor to regional GDP growth. The report suggests that the tourism sector will also play a significant role in boosting GDP in several countries, while low inflation and favorable financial conditions are expected to encourage private investment and consumption.
According to Emirates News Agency, the MOMR indicates that recent US tariffs will likely have minimal impact on the region, thanks to exemptions for oil and gas and limited exposure to US trade. The report also highlights that the strong travel and tourism sector is expected to persist, with gasoline, transportation diesel, and jet kerosene leading the growth in oil demand. The demand is forecasted to increase by 181 tb/d year-on-year in the third quarter of 2025. Warmer weather will likely boost demand for power generation, supporting the 'other products' category, which includes direct crude burning.
Looking ahead to 2025, demand for major oil products such as petrochemical feedstock, LPG/NGLs, and naphtha is expected to remain solid, spurred by new capacity additions and a regional shift towards petrochemicals to capitalize on higher margins. Transportation fuels, including gasoline, diesel, and jet/kerosene, are predicted to benefit from increased driving mobility and strong air travel demand. Diesel oil demand is expected to rise due to construction activities in Saudi Arabia.
Residual fuel oil demand is projected to remain stable, supported by power sectors in Saudi Arabia and Iraq. Among oil products, LPG/NGLs are anticipated to drive growth with a 45 tb/d increase year-on-year. Gasoline and diesel demand are expected to grow by approximately 40 tb/d and 35 tb/d year-on-year, respectively. Jet/kerosene demand is forecast to rise by 25 tb/d year-on-year, while naphtha is projected to see a 30 tb/d uptick year-on-year. Residual fuel oil demand is expected to grow by 10 tb/d year-on-year. However, the 'other products' category is forecast to remain weak, with overall oil demand in the region projected to rise by 143 tb/d year-on-year, reaching an average of 9.0 mb/d in 2025.
The report further projects that in 2026, the non-oil sector will continue contributing significantly to regional GDP through government infrastructure spending. This, along with robust petrochemical industry needs and healthy mobility, is expected to support a year-on-year oil demand growth of 143 tb/d. Overall, oil demand in the Middle East is projected to average 9.1 mb/d in 2026.