The U.S. Energy Information Administration has lowered its forecast for global oil demand in 2026, citing elevated fuel prices, tightening supply, and government-led conservation measures following ongoing disruptions in the Middle East.
Inventory Drawdown Accelerates
According to the agency’s latest Short-Term Energy Outlook, OECD total liquid fuels inventories are projected to fall to just under 2.3 billion barrels by December 2026—the lowest level since the dataset began in 2003 and well below the five-year average of 2.8 billion barrels. The drawdown reflects continued reliance on stored supplies to offset reduced flows through the Strait of Hormuz.
Demand Forecast Revised Downward
The EIA now expects global oil demand to contract by an average of 1.1 million barrels per day in 2026 compared with 2025, marking the first annual decline since the pandemic-driven drop in 2020. The revision incorporates reports of government initiatives aimed at reducing fuel consumption, including fuel switching and efficiency measures.
Price Outlook Remains Elevated
Benchmark Brent crude is forecast to average around $105 per barrel in the spot market for June and July, above the $91.60 futures price recorded earlier this week. The agency stated that prices are likely to stay high until global oil flows normalize and inventories are replenished.
U.S. Product Demand Trends
Domestically, total products supplied averaged 20.4 million barrels per day over the most recent four-week period, up 3.0 percent from the same period last year. Motor gasoline inventories rose by 3.4 million barrels to 215.0 million barrels but remain 5 percent below the five-year average.