According to the EIA, global oil demand in Q2 2026 declined again quarter-on-quarter, reaching 100.4 million bbl/d. The IEA and OPEC also report a significant decline. As previously expected, June saw a record year-on-year decline in oil demand of 4.0 million bbl/d (EIA) amid extremely high prices and supply shortages.
By the end of 2026, most analysts anticipate demand to decline year-on-year: by 1.2 million bbl/d according to the EIA , and by 1.0 million bbl/d according to the IEA. OPEC is the only one anticipating demand growth in 2026, by 0.8 million bbl/d to 105.9 million bbl/d.
However, all current demand forecasts are quite optimistic and assume a swift resolution of the conflict between the United States and Iran in Q3 2026, which has not yet happened.
Amid the ongoing 2026 Iran war, Q2 2026 was the worst quarter for liquid hydrocarbons supply since the COVID-19 pandemic. The EIA estimates supply at 95.3 million bbl/d. The largest declines were seen in Saudi Arabia, Iraq, Kuwait, and only then Iran. Another important event was the UAE’s withdrawal from OPEC.
In annual terms, the EIA forecasts supply at 101.9 million bbl/d in 2026 and 109.8 million bbl/d in 2027, below last quarter’s forecasts. The key drivers of supply growth are expected to be OPEC as a whole, the UAE, the United States, and Qatar.
A short-term recovery in supply will depend entirely on the trajectory of the 2026 Iran war and the Strait of Hormuz blockade.
As previously forecast, the market entered deficit in Q2 2026. According to the EIA, due to large-scale production shut-ins, the surplus averaged 5.1 million bbl/d.
Analysts estimate that the oil market deficit peaked in May-June 2026, but the outlook depends on the further development of the conflict and the status of the Strait of Hormuz, which currently remains blocked.
According to analysts’ forecasts, a shift toward a global oil market surplus (oversupply) is projected to begin in late 2026, specifically Q4, and extend into 2027.
In the short term, Brent crude prices will be driven primarily by the trajectory of the conflict between the United States and Iran and the magnitude of the deficit. At the same time, given the changing situation, it is crucial to consider only updated analysts’ forecasts, as not all of them are revised promptly.
After a brief pause in June, global oil prices surged again on news of a renewed active phase of the conflict.
Analysts anticipate a swift end to the Middle East conflict, which should lead to a prompt decline in oil prices. The effects of this price shock are expected to linger through 2027, with a stabilisation of global oil prices projected in 2028. The long-term (post-2030) consensus forecast for Brent crude stands at US$69.6 per barrel in real terms (expressed in 2026 prices), while the prospects for an end to the conflict remain uncertain.
