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EIA Lowers 2026 Oil Demand Forecast as Strait of Hormuz Disruptions Persist

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The US Energy Information Administration lowered its 2026 global oil demand forecast, saying weaker consumption could help contain crude price increases stemming from disruptions in the Strait of Hormuz, in its monthly Short-Term Energy Outlook for June released Tuesday.

The report reflects data and analysis completed as of June 4.

The agency said high fuel prices, tighter fuel availability and government policies are reducing oil use this year, particularly in Asia, leaving global consumption about 1 million barrels per day below last year's level.

"Any scenario involving full restoration of inventories, production, and trade flows to pre-conflict levels must account for the partial restructuring of the global oil market that has already occurred," EIA Administrator Tristan Abbey said.

The agency expects the Strait of Hormuz to remain effectively closed in the near term, with disruptions to oil production and shipments continuing across the Middle East.

Middle Eastern producers have reduced output by over 11 million b/d, contributing to global inventory draws averaging 6.3 million b/d in Q2 2026 and 7.6 million b/d in Q3.

EIA estimated crude production shut-ins from Hormuz-related disruptions at 11.3 million b/d in May, up from 10.5 million b/d in April.

Saudi Arabia had the largest share at 3.29 million b/d in May, up from 3.20 million b/d the previous month. Iraq followed with 3.19 million b/d, up from 3.13 million b/d, while Kuwait came third at almost 2 million b/d.

The EIA said oil inventories in countries belonging to the Organization for Economic Co-operation and Development have dropped to their lowest level since 2003, while global oil demand will fall by 1.1 million b/d in 2026 before rebounding by 2.5 million b/d in 2027.

Reports of a US-Iran agreement and softer oil demand pushed crude prices lower in May, but the EIA expects Brent crude spot prices to average $105 per barrel in June and July as limited shipments continue to tighten supplies.

The agency forecasts Brent crude spot prices will average $95/bbl in 2026 and $79/bbl in 2027 as oil production increases and supply flows gradually normalize across the Middle East.

Meanwhile, WTI spot prices are projected at $88.32/bbl in 2026 and $74.39/bbl in 2027.

US crude oil production is projected to average 13.7 million b/d in 2026 and 14.2 million b/d in 2027.

Demand for US crude oil and petroleum products increased as disruptions in the Strait of Hormuz restricted competing supplies, lifting net exports to a record 5.8 million b/d in April, with diesel and jet fuel driving much of the increase, while May remained near that level.

The EIA expects US crude oil and petroleum product net exports to average 4.2 million b/d this year, up 1.4 million b/d from 2025.

Additionally, EIA lowered its annual US commercial crude inventory forecast for 2026 by 2.8% to 419 million barrels, and for 2027 by 2.6% to 422 million barrels.

Strategic Petroleum Reserve inventories are expected to hit 236.3 million barrels by the end of 2026, down from 413.5 million barrels at the end of 2025, before partially recovering to 339.5 million barrels by year-end 2027.

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