EIA expects a drop in global oil demand will limit price increases from Hormuz disruptions
The U.S. Energy Information Administration published its June Short-Term Energy Outlook (STEO), reducing its expectation for global oil demand in 2026.
High fuel prices, reduced fuel availability, and government initiatives are curbing oil consumption this year, particularly in Asia, resulting in the world consuming 1 million fewer barrels of oil each day on average than it did last year. 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.
"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.
Key takeaways from the June STEO are below.
- Global oil markets. With the Strait of Hormuz remaining effectively closed in the near term, disruptions to global oil production and shipments continue. Middle Eastern oil producers have cut output by over 11 million barrels per day (b/d), leading to large global inventory draws that average 6.3 million b/d in 2Q26 and 7.6 million b/d in 3Q26. As a result, oil inventories in OECD countries are the lowest since 2003. Global oil demand in 2026 falls by 1.1 million b/d compared with last year but is expected to increase by 2.5 million b/d in 2027, as oil prices decline and oil production in the Middle East gradually rises.
- Crude oil price forecast. Crude oil spot prices dropped in May on reports of an agreement between the United States and Iran and falling oil demand. However, the Brent price averages $105 per barrel (b) in June and July, as oil shipments remain limited and oil production and inventories fall. We expect prices to average $79/b in 2027 when supply flows and oil production resume.
- U.S. petroleum trade. Disruptions to crude oil and refined product flows through the Strait of Hormuz have led to increased demand for U.S. supply, pushing U.S. crude oil and petroleum product net exports in April to a record 5.8 million b/d, with May net exports staying close to that level. The increase in exports has been most pronounced for diesel and jet fuel. Overall, we expect U.S. crude oil and petroleum product net exports to average 4.2 million b/d this year, up 1.4 million b/d from 2025.
- Natural gas prices. The Henry Hub spot price averaged $2.94 per million British thermal units (MMBtu) in May, up 17 cents/MMBtu from April, as warmer temperatures increased electric power sector demand. However, supply growth continues to outpace demand, lowering prices in our outlook from earlier forecasts. We forecast the Henry Hub price to average $3.34/MMBtu in 2H26, similar to the price in 2H25.
- Electricity generation. We expect above-average temperatures this summer to increase U.S. electricity generation by 3% compared with the summer of 2025. Increased solar (+19%) and wind (+10%) generation will meet demand, as coal (-2%) generation gradually decreases.
The full June 2026 Short-Term Energy Outlook is available on the EIA website.