Oil to hold above $80 a barrel as Middle East supply risks persist

By Sumit Saha

Aug 31 (Reuters) - Analysts have maintained forecasts for oil prices above $80 a barrel in 2026 as shipping disruptions linked to the U.S.-Iran conflict drive expectations of reduced supplies while weak demand in China limits the upside, a Reuters poll showed.

An August survey of 31 economists and analysts forecast that Brent crude would average $85.08 a barrel in 2026 and U.S. crude $80.20 a barrel, roughly in line with July's forecasts of $85.22 and $80.14, respectively.

"China remains the biggest downside risk as import demand will likely remain sluggish as long as oil hovers above $80/bbl. The urge to refill inventories will only happen at more benign oil price levels," said Suvro Sarkar, head of energy research at DBS Bank.

Analysts polled by Reuters expect global oil demand to shrink by between 1 million and 1.6 million barrels per day in 2026.

China's crude oil imports fell to a near decade-low in June and July imports remained 24.3% lower than a year earlier.

SHIPPING DISRUPTIONS SUPPORT PRICES

The U.S.-Iran war, which began in late February and escalated into attacks on energy and shipping infrastructure across the Gulf region, has sharply reduced vessel traffic through Middle Eastern waterways, including the Strait of Hormuz.

Progress in efforts to restore shipping through the Strait of Hormuz remained limited in August. On Sunday, U.S. forces struck two launchers on Iran's Larak Island, the first known U.S. strike on Iran since late July. Iran responded by attacking two U.S. air bases in Jordan, Iranian media reported, citing the Revolutionary Guards.

Brent crude has traded mostly between the high $80s and mid-$90s a barrel.

Iran and Oman are still working on the details of an agreement on the Strait of Hormuz according to which the countries would share the waterway and the revenue it generates.

"Traders are no longer pricing an imminent total collapse of Gulf exports, but they are also not pricing a swift return to normal," said Phil Flynn, senior analyst with Price Futures Group.

Reuters' survey showed analysts expected the global oil market to remain in deficit in 2026, with estimates ranging from 1.65 million to 3.5 million barrels per day.

SUPPLY SHOCK DOMINATES

The International Energy Agency expects global demand to fall by 1.6 million bpd in 2026, while OPEC forecasts growth of 580,000 bpd, albeit 200,000 bpd less than it projected earlier.

OPEC+, which comprises the Organization of the Petroleum Exporting Countries, Russia and other allies, in August announced a 188,000 bpd hike for September, completing the group's planned rollback of about 1.65 million bpd of voluntary production cuts introduced in 2023.

Yet six months into the Iran war, OPEC+'s ability to sway oil prices has waned as supply disruptions, especially in the Middle East, overshadow its output decisions and reduced imports by China, the world's biggest oil importer, help to balance markets.

(Reporting by Sumit Saha in Bengaluru; editing by Barbara Lewis)