The U.S. Energy Information Administration (EIA) has lowered its outlook for global oil demand in 2026, citing high fuel prices, reduced fuel availability, and government conservation measures as key factors behind the drop.
This downward revision is largely driven by weaker consumption across Asia, which has been impacted by these measures, as well as disruptions to energy flows through the Strait of Hormuz.
The EIA's 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.
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.
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.
Despite these supply losses, the EIA believes weakening demand will help prevent prices from climbing even higher than current levels.
The agency expects Brent crude to average $105 per barrel during June and July, but falls to $95 per barrel in 2026 before dropping to $79 per barrel in 2027 as oil production gradually recovers.
U.S. energy exports have seen a significant boost due to the disruptions, with U.S. net exports of crude oil and petroleum products reaching a record 5.8 million bpd in April.
This increase is driven largely by increased shipments of diesel and jet fuel, and the agency now expects U.S. net petroleum exports to average 4.2 million bpd in 2026.
The global oil market has already begun adapting to the disruption, and any scenario involving full restoration of inventories must account for this partial restructuring.
