VIENNA: The OPEC Monthly Oil Market Report (MOMR) for July expects the near term economic activities in the Middle East to remain strong, underpinned by the non-oil sector, which is one of the key drivers of regional GDP growth.

Furthermore, MOMR noted that tourism will contribute significantly to the GDP of some countries in the region while low inflation and easing financial conditions will spur private investment and consumption.

Meanwhile, the monthly publication said the latest US tariffs are expected to have a limited impact on the region due to exemptions made for oil and gas, as well as limited exposure to US trading.

Additionally, current robust travel and tourism are expected to continue, with gasoline, transportation diesel and jet kerosene projected to lead oil demand growth, which is forecast to reach 181 tb/d, y-o-y, in 3Q25. Additionally, demand for power generation due to warmer weather is projected to support demand for the ‘other products’ category (including direct crude burning) in the region.

In 2025, demand for major oil products, including petrochemical feedstock, LPG/NGLs and naphtha, is expected to remain robust, with some new capacity additions, as many countries in the region are turning their attention to petrochemicals and taking advantage of higher margins. Furthermore, transportation fuels, including gasoline, diesel and jet/kerosene, are expected to be supported by heightened driving mobility and strong air travel. Diesel oil demand is projected to benefit from construction activity in Saudi Arabia.

Residual fuel oil demand is also expected to be steady, with support from the power sectors in Saudi Arabia and Iraq. In terms of products, demand for LPG/NGLs is expected to drive oil product demand growth, with an increase of 45 tb/d, y-o-y. Gasoline and diesel demand are expected to increase by around 40 tb/d and 35 tb/d, y-o-y, respectively. Jet/kerosene is forecast to increase by 25 tb/d, y-o-y, and naphtha is projected to see an uptick of 30 tb/d, y-o-y. Demand for residual fuel oil is projected to see a growth of 10 tb/d, y-o-y. However, the ‘other products’ category is forecast to remain weak. Overall, oil demand in the region is projected to increase by 143 tb/d, y-o-y, to average 9.0 mb/d in 2025.

In 2026, the ongoing contribution of non-oil activity to regional GDP is expected to continue, including through government infrastructure-related spending. These factors, combined with solid petrochemical industry requirements and healthy mobility, are forecast to support y-o-y oil demand growth of 143 tb/d. Overall, oil demand in the Middle East is projected to average 9.1 mb/d in 2026.