The U.S. Energy Information Administration (EIA) has released its latest outlook indicating that oil inventories among the Organization for Economic Cooperation and Development (OECD) countries are expected to fall to record lows by the end of 2026. According to the EIA’s Short-Term Energy Outlook published in early June, total oil stocks in these economies will drop below 2.3 billion barrels by December, the lowest level recorded since the agency began tracking data in 2003. This sharp decline is largely driven by ongoing supply disruptions linked to the conflict in the Middle East, which has significantly reduced oil flows through the strategic Strait of Hormuz.
The EIA’s report assumes that marine traffic through the Strait of Hormuz will not return to pre-conflict levels until early 2027, despite a partial reopening expected in the third quarter of 2026. This disruption has led to an estimated loss of approximately 11 million barrels per day in Middle Eastern oil production since May. To compensate, global oil inventories are being drawn down rapidly, placing upward pressure on prices. The agency projects Brent crude oil prices to average around $105 per barrel during June and July, higher than current market prices hovering near $90 per barrel.
In addition to supply constraints, global oil demand is expected to decline by 1.1 million barrels per day in 2026, marking the first decrease since the pandemic-related drop in 2020. Factors contributing to this fall include elevated oil prices, reduced fuel availability, and government efforts aimed at conserving energy resources. However, demand is forecasted to rebound strongly in 2027, with an increase of 2.5 million barrels per day projected as production gradually resumes and flows through the Strait of Hormuz improve.
U.S. crude oil inventories also reflect this tightening market dynamic. For the week ending June 5, commercial crude stocks dropped by 7.2 million barrels to a total of 426.5 million barrels, surpassing analyst expectations for a smaller drawdown. The Strategic Petroleum Reserve also decreased by nearly 8 million barrels during this period. Meanwhile, U.S. net exports of crude oil and petroleum products hit a record high of 5.8 million barrels per day in April and are expected to maintain similar levels moving forward due to increased demand for diesel and jet fuel.
Natural gas markets show a different trend due to domestic pricing structures. The EIA forecasts relatively stable natural gas prices through 2026 with modest increases anticipated in 2027 as supply growth slows and demand rises, particularly from power generation and export markets. Electricity generation is expected to increase by about 3% this summer compared to last year, with renewable sources such as solar and wind contributing significantly to this growth while coal-fired power generation declines.
Looking ahead, Brent crude prices are projected to ease back to an average of $79 per barrel in 2027 as production normalizes and traffic through the Strait of Hormuz returns to previous levels. Gasoline prices are also expected to decrease from an average of $3.90 per gallon in 2026 to $3.64 per gallon next year. The overall picture painted by the EIA highlights ongoing supply challenges and market volatility driven by geopolitical tensions but anticipates gradual recovery in both supply chains and demand over the next year.
