In their latest Short-Term Energy Outlook (STEO), the EIA revised its global oil balance outlook as the US and Iran continue to fall short of an agreement to end the conflict in the Middle East. As a result, the agency now expects the global oil market deficit to persist through the end of 2026.
With the fragile ceasefire failing to produce a meaningful diplomatic breakthrough, the EIA pushed back its base-case assumption for the reopening of the Strait of Hormuz from late Q2 2026 to Q3 2026. That delay also postpones the recovery of global oil production to pre-conflict levels until next year, extending supply deficits throughout the remainder of 2026. Most notably, the agency widened its Q3 2026 deficit estimate to -7.6 MMBbl/d, compared to -4.4 MMBbl/d in the previous STEO. The EIA also revised Q4 balances from a small surplus in the May report to a deficit in the June outlook.
The EIA estimates that global production shut-ins averaged 11.3 MMBbl/d in May and expects those volumes to continue rising through June as storage capacity approaches its limits. However, the agency believes that higher fuel prices, reduced fuel availability, and government-led conservation efforts have already begun to weigh on consumption, limiting inventory draws despite the loss of supply. Reflecting those demand impacts, the EIA now forecasts global oil demand to decline by an average of 1.1 MMBbl/d in 2026, a sharp downgrade from last month's expectation for growth of 0.2 MMBbl/d.
Even with weaker demand, the prolonged supply disruption is expected to keep global balances in deficit through the end of next year, driving OECD commercial inventories to historically low levels. The EIA forecasts stocks will fall to just under 2.3 billion barrels, the lowest level in its dataset dating back to 2003. That would leave inventories roughly 500 million barrels below the five-year average of 2.8 billion barrels. For comparison, before the conflict began, the agency had projected OECD stocks would rise above 3.1 billion barrels by the end of 2026.
Against this backdrop, the EIA also revised its 2026 WTI price outlook higher as oil markets remain subject to elevated geopolitical risk. The agency forecasts WTI will average around $100/Bbl in Q2 before easing modestly to $95.45/Bbl in Q3 and $84/Bbl in Q4. On an annual basis, the EIA now expects WTI to average $88.32/Bbl in 2026, up from $85.68/Bbl in the May STEO. Notably, the agency left its 2027 WTI price forecast unchanged.
Overall, the EIA continues to lower its global balance expectations as significant volumes remain unable to transit the Strait of Hormuz. With inventories now projected to fall to record lows by the end of 2026, the agency expects oil prices to remain elevated well into 2027, even if supply disruptions begin to ease.