The U.S. Energy Information Administration (EIA) has reduced its forecast for global oil demand in 2026, stating that lower consumption could help keep oil prices from rising, even as disruptions continue to impede ene...
The U.S. Energy Information Administration (EIA) has reduced its forecast for global oil demand in 2026, stating that lower consumption could help keep oil prices from rising, even as disruptions continue to impede energy flow through the Strait of Hormuz.
In its June Short-Term Energy Outlook (STEO) released on Tuesday, the EIA predicted that global oil demand will drop by 1.1 million barrels per day (bpd) this year compared to 2025. The agency attributed this decline to high fuel prices, limited fuel availability, and government conservation measures, particularly in Asia.
This forecast comes amid ongoing challenges in shipping and energy markets due to the conflict with Iran and the near closure of the Strait of Hormuz, a critical oil transit route.
According to the EIA, “Lower demand could limit increases in crude oil prices due to short-term disruptions in oil flow out of the Middle East through the Strait of Hormuz.”
Middle Eastern oil producers have cut output by more than 11 million bpd, contributing to significant global inventory reductions, with averages of 6.3 million bpd in the second quarter and 7.6 million bpd in the third quarter. OECD oil inventories are now at their lowest since 2003.
Despite these supply losses, the EIA believes that decreasing demand will help prevent oil prices from rising further.
Brent crude prices were lower in May amid reports of a potential U.S.-Iran agreement and signs of faltering demand. However, the EIA expects Brent to average about $105 per barrel during June and July due to constrained oil shipments and declining inventories.
Looking ahead, the agency predicts that Brent crude will average $95 per barrel in 2026 and drop to $79 per barrel in 2027 as oil production begins to recover and trade flows stabilize.
EIA Administrator Tristan Abbey mentioned that the global oil market is already adapting to these disruptions. “Any scenario considering a full return to pre-conflict inventory, production, and trade levels must recognize the partial restructuring of the global oil market that has already taken place,” Abbey stated.
U.S. Energy Exports
The disruptions have also increased the demand for U.S. energy exports. According to EIA data, U.S. net exports of crude oil and petroleum products hit a record 5.8 million bpd in April and stayed close to that in May, primarily due to higher shipments of diesel and jet fuel.
The agency now predicts that U.S. net petroleum exports will average 4.2 million bpd in 2026, which is an increase of 1.4 million bpd compared to last year.
In terms of production, U.S. crude oil output is expected to average 13.7 million bpd this year, with an increase to 14.2 million bpd in 2027. U.S. LNG exports are also anticipated to grow, reaching 17 billion cubic feet per day this year and 19 billion cubic feet per day in 2027.
While the EIA forecasts a rebound in global oil demand by 2.5 million bpd next year as prices stabilize and Middle Eastern production recovers, its latest report emphasizes how weakening demand is increasingly offsetting the market impact of one of the most significant disruptions to global oil flows in decades.