Oil prices set to spike again after more Strait of Hormuz disruptions, Red Sea attacks

Oil prices are expected to rise 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 heighten supply risks, a Reuters poll showed.

The July survey of 31 economists and analysts forecast that Brent crude would average $85.22 a barrel in 2026, up from June’s forecast of $84.50.

US crude is projected to average $80.14 a barrel, compared with June’s ​estimate of $79.49.

The 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 US-Iran conflict began in late ​February and has sharply reduced traffic through the Strait of Hormuz, which previously carried about a fifth of global crude ​oil and natural gas supplies, disrupting Middle East output running into millions of barrels a day.

Back-and-forth attacks in recent days have ended a brief pause in the fighting between the two countries.

Additionally, 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 chokepoint for oil ​flows.

Oil demand growth seen falling in 2026

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, adding that his base case assumed full normalization by early 2027.

The poll showed oil demand in 2026 is expected to decline by roughly 500,000 barrels a day to 1.6 million bpd, based on estimates from ten analysts, ​while supply deficit estimates for ​the year range anywhere ⁠from one million bpd to 2.6 million bpd.

The International Energy Agency sees global oil demand falling by one million bpd this year, before rebounding to rise two million ​bpd in 2027.

OPEC lowered its forecast for world oil demand growth in 2026 to ​780,000 barrels ⁠per day, for a third straight 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+, with ​21 members comprising the Organization of the Petroleum Exporting Countries, ​Russia and other allies, is likely to pause oil output increases for three months from October after a September output hike, sources have said.