The Strait Is Closed. The Numbers Are Staggering.

The Strait of Hormuz — the narrow chokepoint through which roughly 20% of global oil supply flows — has been effectively shut since April. The damage is historic.

According to the U.S. Energy Information Administration's May 2026 Short-Term Energy Outlook (STEO), released May 12, Iraq, Saudi Arabia, Kuwait, the UAE, Qatar, and Bahrain collectively shut in 10.5 million barrels per day (b/d) of crude oil production in April alone.

The International Energy Agency put it more directly, according to Reuters: cumulative supply losses from Middle East Gulf producers have already exceeded 1 billion barrels, with more than 14 million barrels per day now shut in. The IEA called it "an unprecedented supply shock."

Brent Hit $138. Your Gas Bill Followed.

Brent crude spiked to $138 per barrel on April 7 — up from an average of $69 per barrel for all of 2025, according to the EIA press release issued by EIA Administrator Tristan Abbey. For the entire month of April, Brent averaged $117 per barrel. That's a $46-per-barrel jump from February's average in under two months.

The EIA is now forecasting Brent to hold around $106 per barrel through May and June, then fall to $89 in Q4 2026 and $79 in 2027 — assuming the strait reopens and production recovers on schedule. U.S. retail gasoline is projected to average $3.88 per gallon for all of 2026, up from $3.10 in 2025.

Those are averages. Right now, drivers are paying more.

How Bad Did the EIA Get This Wrong Last Month?

One month ago, the EIA's April STEO projected a global inventory decline of just 0.3 million b/d for 2026. The May revision increased that to 2.6 million b/d — a swing of 2.3 million barrels per day, according to F&L Asia's reporting on the STEO data.

In Q2 2026 specifically — April through June — the EIA now expects global oil inventories to fall by an average of 8.5 million b/d. The IEA, according to Reuters, projects global oil supply will decline by 3.9 million b/d on average for all of 2026, reaching just 102.2 million b/d total.

Refinery crude throughputs are forecast to plunge by 4.5 million b/d in Q2 2026 to 78.7 million b/d, per the IEA.

The situation escalated faster than anyone had projected.

OPEC Just Lost a Major Player

The UAE walked out of OPEC, effective May 1, 2026. The EIA's May STEO now excludes UAE production data from all OPEC totals, historically and going forward.

Because the UAE held significant spare production capacity, OPEC's collective spare capacity is now forecast to average just 2.5 million b/d in 2027 — down from the EIA's prior estimate of 3.8 million b/d. According to the Institute for Energy Research, that's the buffer the world relies on when something goes wrong. It just shrank by 34%.

Strategic Buffer Erosion and Regional Demand Destruction

Most financial press coverage is treating this as a price story. The deeper issue is what happens when OPEC's spare capacity drops to 2.5 million b/d while 14 million b/d is already shut in — the world has almost no cushion left for another disruption. The EIA is publishing a new quarterly energy security dataset — tracking global strategic petroleum reserves and shipping chokepoints — starting May 13, precisely because the existing data infrastructure wasn't built for a crisis of this magnitude.

Demand destruction is occurring primarily in Asia, which is more dependent on Middle Eastern crude than Western markets. China, Japan, South Korea, and India are bearing the heaviest burden. That has downstream implications for global manufacturing and trade that extend well beyond pump prices.

America's Position

The U.S. is not insulated, but it's better positioned than most. The EIA projects U.S. crude oil production at 13.6 million b/d in 2026 and 14.1 million b/d in 2027. Domestic natural gas production averaged 120.2 billion cubic feet per day in Q1 2026, up 4% year-over-year, driven by the Permian and Haynesville regions.

America's energy independence — built on shale — is why this shock isn't worse for U.S. consumers.

The Outlook

The EIA, the IEA, and every credible energy data source agree: the world is burning through oil reserves at a rate not seen in modern history, the strait may not fully reopen until late 2026 at the earliest, and the supply buffer that stabilized global markets for decades is now gone.

Someone shut the world's most critical oil chokepoint. Every American paying $4-plus at the pump is paying the price.