Global Oil Market Outlook: Prices and Inventory Trends

The US Energy Information Administration (EIA) projects that Brent crude oil prices will remain above $100 per barrel through May and June 2026, averaging $106 per barrel during this period. This forecast is driven by significant production disruptions in the Middle East due to the ongoing conflict, which has led to a sharp decline in global inventories. The EIA estimates that worldwide stockpiles will drop by an average of 8.5 million barrels per day (bpd) in the second quarter of 2026.

Strait of Hormuz Disruptions and Production Shut-Ins

The EIA assumes that the Strait of Hormuz, a critical chokepoint for one-fifth of global oil and gas supplies, will remain effectively closed until late May 2026. Even if shipping traffic resumes in June, oil shipments are not expected to return to pre-conflict levels until later in the year, with some Middle Eastern oil production likely to remain disrupted. In April 2026, Iraq, Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, and Bahrain collectively shut in 10.5 million bpd of crude production. This disrupted production is expected to cause large inventory draws, particularly in May and June, limiting downward pressure on oil prices even after flows through the strait increase.

Price and Inventory Forecasts

Brent crude reached a 2026 high of $138 per barrel on April 7, 2026, and averaged $117 per barrel for the month. As of a recent Tuesday, Brent front-month futures were trading above $107 per barrel, up 3% from the previous close. The EIA forecasts that global crude stockpiles will fall by 2.6 million bpd in 2026, an eight-fold increase from the 300,000 bpd projected in its April outlook, due to a longer-than-expected resumption of oil and gas traffic through the Strait of Hormuz. As Middle East oil production gradually recovers, Brent prices are expected to decline, averaging $89 per barrel in the fourth quarter of 2026 and $70 per barrel in 2027.

US Production Trends

In April 2026, US operators produced 13.75 million bpd of crude, relatively flat compared to March’s average. Meanwhile, US natural gas production rose by 4% year-over-year to 120.2 billion cubic feet per day in the first quarter of 2026. The EIA expects US natural gas output to continue rising through 2027, driven by increased oil production and associated gas. These increases will be supported by 6% growth rates in the Permian Basin and Haynesville shale, respectively.