EIA Sees Prolonged War in Iran Draining Global Oil Stocks Faster Than Expected
By Anthony Harrup
The U.S. Energy Information Administration sees global oil inventories dwindling at a faster rate this year than previously expected as the conflict in the Middle East drags on, blocking shipping through the Strait of Hormuz and locking in regional oil production.
In its latest Short-Term Energy Outlook, the EIA said Tuesday that it expects global oil stocks to decline by 2.6 million barrels a day on average in 2026, compared with its previous estimate of a 300,000 barrels a day decrease. That includes a drop of 8.5 million barrels a day on average in the second quarter. The forecast includes emergency releases from strategic petroleum reserves.
The EIA estimates that Iraq, Saudi Arabia, Kuwait, the United Arab Emirates, Qatar and Bahrain collectively shut in 10.5 million barrels a day of crude oil production in April. "Disrupted production leads to large oil inventory draws, particularly in May and June," the EIA said. The agency also expects that Iran will have to lower its output as the U.S. blockade of Iranian ports curtails its ability to export oil.
The EIA said its forecasts assume that the Strait of Hormuz will remain closed until late May. But even with shipping beginning to pick up in June, shipments likely won't reach prewar levels until later in the year and some oil production in the Middle East is expected to remain disrupted during that period.
Higher crude prices are expected to curtail global demand, particularly in Asia which is more reliant on crude oil from the Middle East, the EIA said. The agency projects global demand growth of 200,000 barrels a day this year, compared with its previous growth estimate of 600,000 barrels a day.
Demand growth is projected to rebound to 1.5 million barrels a day in 2027. The EIA also expects global inventories to rebuild in 2027 at a faster pace than previously estimated, increasing by 3.9 million barrels a day.
The EIA's full-year oil price estimates were little changed from the April outlook. It sees Brent averaging about $95 a barrel in 2026 and $79 a barrel in 2027. West Texas Intermediate crude is expected to average $86 a barrel this year and $74 a barrel in 2027.
Write to Anthony Harrup at anthony.harrup@wsj.com
(END) Dow Jones Newswires
May 12, 2026 13:58 ET (17:58 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.The articles, information, and content displayed on this webpage may include materials prepared and provided by third parties. Such third-party content is offered for informational purposes only and is not endorsed, reviewed, or verified by Morningstar.
Morningstar makes no representations or warranties regarding the accuracy, completeness, timeliness, or reliability of any third-party content displayed on this site. The views and opinions expressed in third-party content are those of the respective authors and do not necessarily reflect the views of Morningstar, its affiliates, or employees.
Morningstar is not responsible for any errors, omissions, or delays in this content, nor for any actions taken in reliance thereon. Users are advised to exercise their own judgment and seek independent financial advice before making any decisions based on such content. The third-party providers of this content are not affiliated with Morningstar, and their inclusion on this site does not imply any form of partnership, agency, or endorsement.
Popular
The Smartest Moves for Bond Investors Today, and What to Do When You Have Too Many Investments
Undervalued by 15%, This Utilities Stock Could Be an Unexpected AI Winner
The Thrilling 37
The 10 Best and 10 Worst Months of All Time for the US Stock Market
United States