Global Oil Supplies on Brink as Hormuz Standoff Continues

The Strait of Hormuz remains closed, and global oil inventories are dwindling. The U.S. Energy Information Administration now expects Brent crude to average around $85 per barrel through the third quarter of 2026 and $86.81 across the whole year.

Oman and Iran continue to negotiate a deal, but Tehran insists that the waterway will not reopen until Washington meets its demands. President Trump has also stated that he is waiting for economic consequences to bring Iran's economy to the brink.

The world's oil buffer is running low, with governments and energy markets relying on enormous reserves to cover some of the shortfall. The United States committed 172 million barrels from the Strategic Petroleum Reserve (SPR) earlier this year, but the SPR has since fallen below 300 million barrels, reaching its lowest level since 1983.

Kieran Tompkins, senior climate and commodities economist at Capital Economics, warned that if the Strait remains closed and oil inventories globally continue to fall rapidly, prices could skyrocket to $120-$140 per barrel by the fourth quarter. The current relatively moderate forecasts rely on the assumption that Gulf oil flows will begin to recover before inventories become dangerously depleted.