EIA Sees Weak Global Oil Demand Limiting Price Spike from Hormuz Disruption

The U.S. Energy Information Administration (EIA) has lowered its outlook for global oil demand in 2026, saying weaker consumption could help cap oil price increases even as disruptions continue to restrict energy flows through the Strait of Hormuz.

In its June Short-Term Energy Outlook (STEO), released Tuesday, the EIA said global oil demand is expected to decline by 1.1 million barrels per day (bpd) this year compared to 2025. The agency cited high fuel prices, reduced fuel availability, and government conservation measures, particularly across Asia, as key factors behind the drop.

The forecast comes as shipping and energy markets continue to grapple with the fallout from the ongoing conflict involving Iran and the effective closure of the Strait of Hormuz, one of the world’s most important oil transit chokepoints.

“The reduced demand could limit crude oil price increases resulting from near-term disruptions in the flow of oil out of the Middle East through the Strait of Hormuz,” the EIA said.

According to the agency, Middle Eastern producers have reduced oil output by more than 11 million bpd, contributing to large global inventory draws averaging 6.3 million bpd in the second quarter and 7.6 million bpd in the third quarter. OECD oil inventories have fallen to their lowest levels since 2003.

Despite those supply losses, the EIA believes weakening demand will help prevent prices from climbing even higher than current levels.

Brent crude prices averaged lower in May amid reports of a potential U.S.-Iran agreement and signs of slowing demand. However, the EIA expects Brent to average about $105 per barrel during June and July as oil shipments remain constrained and inventories continue to decline.

Looking further ahead, the agency forecasts Brent crude will average $95 per barrel for 2026 before falling to $79 per barrel in 2027 as oil production gradually recovers and trade flows normalize.

EIA Administrator Tristan Abbey noted that the global oil market has already begun adapting to the disruption. “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,” Abbey said.

U.S. Energy Exports

The disruptions have also boosted demand for U.S. energy exports. EIA data showed U.S. net exports of crude oil and petroleum products reached a record 5.8 million bpd in April and remained near that level in May, driven largely by increased shipments of diesel and jet fuel.

The agency now expects U.S. net petroleum exports to average 4.2 million bpd in 2026, up 1.4 million bpd from last year.

Meanwhile, U.S. crude oil production is forecast to average 13.7 million bpd this year before rising to 14.2 million bpd in 2027. U.S. LNG exports are also expected to continue growing, reaching 17 billion cubic feet per day this year and 19 billion cubic feet per day in 2027.

While the EIA projects global oil demand will rebound by 2.5 million bpd next year as prices ease and Middle Eastern production recovers, the agency’s latest outlook underscores how demand destruction is increasingly offsetting the market impact of one of the most significant disruptions to global oil flows in decades.

Editorial Standards · Corrections · About gCaptain

Subscribe for Daily Maritime Insights

Sign up for gCaptain’s newsletter and never miss an update

— trusted by our 105,236 members