OPEC trims its demand outlook and Japan moves to subsidise oil importers

OPEC cut its oil demand growth forecast again, with repeated attacks on vessels in the Strait of Hormuz, deadly Houthi strikes on Saudi Arabia and surging freight costs keeping geopolitical risk elevated¹. On the same day Japan’s cabinet backed a plan to help oil importers pay the higher costs of bringing in crude through routes that bypass the strait, Industry Minister Ryosei Akazawa said⁴. A report cited by Reuters said the US blockade has held Iranian crude exports at zero through October².

The attacks have intensified. Bloomberg reported that Iranian attacks on ships crossing the strait have surged, potentially threatening the recent recovery in Persian Gulf oil exports³. Six commercial vessels were hit in a single day after an American fighter jet disabled an Iran-linked tanker^6,7, and four vessels, three tankers and a container ship, were struck by unknown projectiles while transiting the strait on 11 October¹¹. A tanker caught fire east of the strait on Tuesday, according to the Iranian Navy¹⁰. The IRGC’s naval commander said vessels had ignored its warnings and tried to pass by a route it had not authorised⁷; that is the Guard’s account, and the shipping reports describe the projectiles as unattributed¹¹.

Oil traded above $105 a barrel amid the vessel attacks⁵.

Why it matters to investors

The cost of the conflict is moving from freight rates into forecasts and budgets. A cartel cutting its own demand projection is conceding that high prices and disrupted logistics are destroying consumption¹, and a government underwriting its importers’ transport bills is absorbing part of that cost onto the public balance sheet⁴.

Importers elsewhere face the same bill without the subsidy. Pakistan is facing a $1 billion LNG bill this winter, with term supplies from Qatar cheaper than the spot cargoes for which Asian and European buyers are competing ahead of winter⁸.

What to watch

Volume through the strait is the number to follow. The analyst Gustavo de Arístegui said traffic through Hormuz has fallen by 40%, from a waterway that normally carries between 5 and 5.5 million barrels⁹; that claim is his, and the vessel-by-vessel reports are the firmer evidence^10,11.

Two offsetting forces then decide the price. The blockade keeps Iranian barrels out of the market², while attacks threaten the recovery in everyone else’s exports from the Gulf³. Watch whether other importing governments follow Japan in paying for rerouting⁴, and whether OPEC’s next monthly report cuts demand further¹.