Global oil inventories hit lowest levels in decades amid Iran war, warns EIA

Global oil inventories are heading towards their lowest levels in decades as the war between the US and Iran continues to disrupt supplies through the Strait of Hormuz, according to the latest forecast from the US Energy Information Administration (EIA).

In a market outlook released Tuesday, the EIA said the closure of the key shipping route has forced major economies including China, the United States and India to rapidly draw from oil reserves to offset the loss of more than 11 million barrels per day of Middle Eastern output compared to pre-conflict levels.

The report warned that tightening supplies are expected to push fuel prices sharply higher over the next two years.

According to the EIA, diesel and aviation jet fuel wholesale prices are forecast to rise by “more than 60 per cent in 2026 and 40 per cent in 2027” compared to prices before the conflict began.

The agency also said wholesale petrol prices are expected to increase “by 50 per cent in 2026 and nearly 40 per cent in 2027.”

The EIA said its forecast assumes maritime traffic through the Strait of Hormuz “will remain effectively closed in the near term,” although some oil shipments could resume during the third quarter of 2026.

Even if shipping restarts, the agency believes oil production may not return to pre-conflict levels until early 2027.