In their latest Short-Term Energy Outlook, the EIA has revised its global balances outlook as the prolonged closure of the Strait of Hormuz continues to disrupt Middle East supply and accelerate inventory draws. The agency’s latest forecasts assume that the strait remains effectively closed until late May, with flows beginning to pick up by June.
In their latest report, the EIA now expects global oil inventories to decline by 2.6 MMBbl/d in 2026 compared with a 0.3 MMBbl/d decline in the April STEO. The revisions suggest the market is no longer pricing a short-lived disruption, but instead a more sustained tightening cycle extending well into next year.
Supply disruption is still the main driver of the large shift in global oil balances, however, there were changes made to demand estimates. On the supply side, the EIA has assessed that production has averaged 10.5 MMBbl/d of shut-ins in April and predicted it to peak at 10.8 MMBbl/d in May. At the same time, the agency expects higher prices and fuel shortages to reduce global oil demand growth to just 0.2 MMBbl/d in 2026, down from 0.6 MMBbl/d in the April outlook. The supply and demand chart below illustrates weaker demand is still insufficient to offset the scale of ongoing supply losses.
The tightening balance is increasingly reflected in the forward price outlook. The EIA expects WTI prices to average around $103/Bbl through May and June before easing toward the low-$80s by 4Q26 as Gulf production gradually returns. The agency also revised its 2027 WTI outlook higher with WTI spot prices are now estimated to average $74.39/Bbl, roughly $2 higher than the April figure. This increase reflects expectations of a more persistent medium-term tightness rather than a purely short-term disruption. Moving forward, the agency mentioned that delaying the reopening of the Strait by an additional month could raise crude prices by more than $20/Bbl in the near term.
Earlier expectations that inventories could absorb a short disruption are fading as outages persist and recovery timelines continue to extend. While the EIA still expects balances to gradually normalize next year, the continued depletion of inventories is driving global balances lower and supporting higher prices through 2027.