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Informist, Wednesday, Jun. 10, 2026

 

MUMBAI – The US Energy Information Administration expects Brent crude oil price to average around $105 per barrel in June and July, as it sees high drawdown in global inventories and continued "effective" closure of the Strait of Hormuz in the near term. Once the traffic through the strait resumes and oil production that had stopped in recent months in view of the West Asia war re-starts, it believes oil prices will begin to fall, decreasing to $89 per barrel by the last quarter of 2026, it said in its Short-Term Energy Outlook monthly report, June edition.

 

Global oil markets have seen a period of heightened volatility and uncertainty as the de facto closure of the Strait of Hormuz, a major world oil transit chokepoint, has now surpassed three months. Shipping traffic through the strait has been extremely limited since military action began on Feb. 28. The Brent crude oil spot price averaged $107 per barrel in May, $10 per barrel lower than the average in April, the report said. "Although oil price volatility remains elevated, prices fell in May as numerous reports surfaced that the United States and Iran were nearing an agreement to extend the existing ceasefire and re-open the Strait of Hormuz pending future negotiations. As of this writing, the agreement has not been finalised," the report noted.

 

The forecast by the US agency is based on the assumption that the Strait of Hormuz will remain effectively closed in the near term. "In our forecast, oil shipments through the strait resume in the third quarter of 2026 (3Q26), however, we assume that it will likely take several months to ramp up to pre-conflict traffic, which we do not think will occur until early 2027," it said.

 

Noting that global oil markets have remained highly volatile because of limited shipping traffic through the Strait of Hormuz, the report said oil producers in West Asia reduced crude oil production by more than 11 million barrels per day in May compared with pre-conflict levels. This drop in production has resulted in large global inventory draws to meet demand. "Under our assumptions, we expect global oil inventories will fall by an average of 6.3 million b/d in 2Q26 (Apr-Jun) and by 7.6 million b/d in 3Q26 (Jul-Sept). Oil inventories in the Organization for Economic Cooperation and Development in our forecast (will) fall to their lowest levels since 2003."

 

The recent high prices and lower availability of crude oil couple with government measures in various countries have lowered oil demand. Stating this, the report has forecast that global oil demand will decrease by 1.1 million barrels per day over the course of 2026. However, oil demand will rebound next year following a return of supply flows later in 2026, with oil demand growing by 2.5 million barrels per day in 2027 to 105.3 million barrels per day, the report said.

 

At 1115 IST, the August futures contract of Brent crude oil on the Intercontinental Exchange was $91.33 per barrel, down 0.1% from its previous close.  End

 

US$1 = INR 95.27

 

Reported by Abhijit Doshi

Edited by Akul Nishant Akhoury

 

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