Oil & Gas

VIENNA: The OPEC Monthly Oil Market Report (MOMR) for July 2025 projects that near-term economic activity in the Middle East will remain strong, driven primarily by the non-oil sector—one of the key contributors to regional GDP growth. The report highlights tourism as a major GDP booster in several countries, while low inflation and easing financial conditions are expected to stimulate private investment and consumption. Moreover, the recent U.S. tariffs are anticipated to have minimal impact on the region due to oil and gas exemptions and limited trade exposure to the United States.

Travel and tourism are forecast to remain robust, further strengthening demand for transportation fuels. Gasoline, transportation diesel, and jet kerosene are expected to lead oil demand growth, with a projected year-on-year increase of 181 thousand barrels per day (tb/d) in the third quarter of 2025. Additionally, hotter weather conditions are likely to increase demand for power generation, which will support consumption in the ‘other products’ category, including direct crude burning. This trend is expected to continue throughout the summer months.

Demand for major oil products such as petrochemical feedstock, LPG/NGLs, and naphtha is anticipated to stay strong in 2025. The report attributes this to new capacity additions across the region, as many countries focus on petrochemical expansion to capitalize on high profit margins. Transportation fuels will also see steady demand due to increased driving and air travel activity, while diesel consumption is set to benefit from ongoing construction projects in Saudi Arabia. Residual fuel oil demand is expected to remain stable, particularly with continued use in the power sectors of Saudi Arabia and Iraq.

In terms of specific products, LPG/NGLs are projected to drive growth with a 45 tb/d increase year-on-year, followed by gasoline and diesel at 40 tb/d and 35 tb/d, respectively. Jet/kerosene and naphtha demand are forecast to grow by 25 tb/d and 30 tb/d, respectively, while residual fuel oil will see a 10 tb/d rise. However, the ‘other products’ category is expected to remain weak. Overall oil demand in the Middle East is projected to grow by 143 tb/d year-on-year, reaching an average of 9.0 million barrels per day (mb/d) in 2025. Looking ahead to 2026, continued support from non-oil economic activity, government infrastructure spending, and a strong petrochemical sector are expected to sustain oil demand growth at 143 tb/d, bringing the regional average to 9.1 mb/d.