Oil prices seen gaining as Middle East supply disruptions persist: Reuters poll

By Noel John

July 31 (Reuters) - 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.

U.S. 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 U.S.-Iran conflict begun in late February 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 have 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

Normalisation 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 normalisation 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 10 analysts, while supply deficit estimates for the year range anywhere from 1 million bpd to 2.6 million bpd. 

The International Energy Agency sees global oil demand falling by 1 million bpd this year, before rebounding to rise 2 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. 

(Reporting by Noel John in Bengaluru; Editing by Clarence Fernandez)