Oil prices are expected to climb further this year as shipping disruptions in the Strait of Hormuz and attacks in the Red Sea by Iran-backed Houthis threaten oil flows and increase supply risks, according to a Reuters poll. The July survey of 31 economists and analysts forecasts Brent crude will average $85.22 a barrel in 2026, an increase from June's forecast of $84.50. US crude is projected to average $80.14 a barrel, up from the June estimate of $79.49.
These benchmarks have averaged $87.03 and $82.41, respectively, year-to-date. "The key support remains the geopolitical risk premium associated with the Iran conflict, which is likely to persist through the second half of the year and keep volatility elevated," said UniCredit analyst Tobias Keller. The conflict, which began in late February, has significantly reduced traffic through the Strait of Hormuz, a vital chokepoint that previously handled about a fifth of global crude oil and natural gas supplies, impacting Middle East output by millions of barrels daily.
Recent exchanges of attacks have ended a brief lull in hostilities. Concurrently, the Houthi militia in Yemen has disrupted shipping through the Bab el-Mandeb Strait, linking the Red Sea to the Gulf of Aden, creating a second critical chokepoint for oil transport. "Normalization of oil flows from the Gulf will take about four to six months after the United States and Iran reach a durable ceasefire," said Phil Flynn, senior analyst with Price Futures Group, noting his base case assumes full normalization by early 2027. Multiple container ships are anchored at Khor Fakkan Port in the United Arab Emirates.
The poll also indicated that oil demand in 2026 is expected to decrease by approximately 500,000 barrels a day to 1.6 million bpd, based on estimates from ten analysts. Supply deficit estimates for the year range from one million bpd to 2.6 million bpd. The International Energy Agency anticipates global oil demand will fall by one million bpd this year before rising by two million bpd in 2027. OPEC has lowered its forecast for world oil demand growth in 2026 to 780,000 barrels per day, marking a third consecutive downward revision.
"As the global economy has been hit hard by the energy crisis, a fast recovery of fundamental demand apart from restocking of inventories still looks unlikely," said Thomas Wybierek, an analyst at NORD/LB. OPEC+, comprising the Organization of the Petroleum Exporting Countries, Russia, and allied nations, is reportedly considering pausing oil output increases for three months starting in October, following a September hike, according to sources.