EIA also broke down the 14.6 million barrels per day that transited the Strait of Hormuz into crude oil and petroleum products, with crude oil accounting for 10.7 million barrels per day (almost three-quarters) and petroleum liquids for 3.9 million barrels per day.

Buyers have had to replace Middle East oil and petroleum liquids with shipments from other parts of the world and use alternative shipping routes. Volumes in the first quarter rose for crude oil and petroleum liquids transported through the Panama Canal and the Bab El-Mandeb Strait located between the southwestern tip of the Arabian Peninsula (Yemen) and the Horn of Africa (Djibouti and Eritrea). It connects the Red Sea to the Gulf of Aden and the Indian Ocean, serving as a vital link for global trade and energy shipping.

Strategic chokepoints, such as the Strait of Hormuz, are narrow waterways along major international shipping routes that play a vital role in global energy security. Any disruption that prevents oil from passing through one of these key passages, even for a short time, can lead to major supply interruptions, higher transportation expenses, and rising global energy prices. Some chokepoints can be circumvented by using alternative routes, which often add significantly to transit time. In the case of the Strait of Hormuz, there are two pipelines that can avoid the Strait of Hormuz but are limited by their pipeline capacity. Saudi Arabia’s East-West pipeline transports oil to ports on the Red Sea and has a current capacity of 7 million barrels per day. The United Arab Emirates’ Abu Dhabi Crude Oil Pipeline, also known as the Habshan-Fujairah pipeline, can carry up to 1.8 million barrels per day. The UAE plans to double that capacity by next year by constructing a new pipeline.

The decline of flows through the strait has resulted in much higher Brent crude oil prices, rising more than 45% since the start of the conflict. In the United States, average retail gasoline prices have risen above $4.50 a gallon, but are still below 2022 levels when Russia invaded Ukraine during the Biden administration.

The EIA report also provides Strategic Oil Inventories for select countries. At the end of the first quarter of 2026, the United States had 413 million barrels of strategic oil reserves, substantially less than the 714 million barrels of capacity that the caverns hold due to President Biden releasing the reserves to lower gas prices before the 2022 mid-term elections and not replacing them. China had 1,541 million barrels of oil at the end of the first quarter 2026, more than the 1,397 million barrels it had at the end of the fourth quarter 2025, which shows that China is well prepared for emergencies. However, China relies on oil imports for most of its supply and is heavily dependent on the Strait of Malacca for the transit of much of it.

Analysis

This report is the first edition of the EIA’s new Global Energy Security Data report, launched in part to assess how the war in Iran has disrupted global energy supplies and reshaped flows in oil markets. During the first quarter of 2026, the Strait of Hormuz lost about 6 million barrels per day of oil and petroleum products that had transited through it in the previous quarter, down almost 30%, with about three-fourths of that amount in oil shipments and the rest in petroleum liquids. EIA also estimated the strategic oil inventories for select countries at the end of the first quarter of 2026. China’s strategic oil inventories were 3.7 times those of the United States at 1,541 million barrels, making China well prepared for emergencies affecting oil supplies.

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The larger decrease in oil inventories and the disruptions to oil supplies in the Middle East result in higher oil prices. The Brent oil spot price on April 7 reached a high of $138 per barrel and averaged $117 per barrel for the month, $46 per barrel higher than the average in February. EIA expects Brent oil prices to remain over $100 per barrel in May and June, averaging $106 per barrel. Once the Strait is opened and oil production in the Middle East rises, the agency expects oil prices to fall, dropping to an average of $89 per barrel in the fourth quarter of 2026 and $79 per barrel in 2027. West Texas Intermediate oil is expected to average $86 a barrel this year and $74 a barrel in 2027. EIA expects that it will take until late 2026 or early 2027 for most pre-conflict production and trade patterns to resume, and some will take even longer.

EIA expects the higher prices to reduce oil demand, which will help balance the oil market. EIA expects reductions in oil demand to occur primarily in Asia, which is more reliant on oil supplies from the Middle East than other areas. EIA now assumes that global oil demand will increase by an average of 0.2 million barrels per day in 2026, down from an average of 0.6 million barrels per day in the April STEO and 1.2 million barrels per day in the February STEO. Once oil production and trade return to the Middle East, EIA expects oil demand to rebound, growing by 1.5 million barrels per day in 2027 to 105.6 million barrels per day. The EIA also expects global inventories to rebuild in 2027 at a faster pace than previously estimated, increasing by 3.9 million barrels a day.

The May STEO assumes that the strait reopens in late May. If the Strait of Hormuz remains shut through June, one month longer than the current assumption, oil prices would be about $20 per barrel higher in the near term. Prices would remain higher than the current forecast through next year, with the difference narrowing over time.

EIA reported that U.S. oil production set a record of 13.6 million barrels per day in 2025, up 3% —350,000 barrels per day —over the previous record set in 2024, making the United States the world’s largest oil producer—a ranking it has held since 2018. The May STEO expects U.S. oil production to remain at 13.6 million barrels per day in 2026 and then increase to 14.1 million barrels per day in 2027.

The May STEO expects U.S. gasoline prices to average $3.88 in 2026 and fall to $3.62 in 2027 from an average of $3.10 in 2025.

Analysis

EIA’s May STEO assumes that the conflict in Iran will end by the end of May, but that it will take until late this year or early next year for most oil production and trade flows to return to pre-conflict levels. EIA expects Brent oil prices to average $95 a barrel in 2026 and $79 a barrel in 2027, up from $69 a barrel in 2025. For May and June, it expects those prices to be over $100 per barrel, averaging $106 per barrel. The agency expects demand destruction to occur mainly in Asia, with global demand increasing just 0.2 million barrels per day in 2026, but rebounding in 2027 by 1.5 million barrels per day, reaching 105.6 million barrels per day. U.S. oil production reached a record 13.6 million barrels per day in 2025, and the EIA expects the same level in 2026, then increasing to 14.1 million barrels per day in 2027. The United States remains the world’s largest oil producer.

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Given the value Alaska brings to the U.S., one would assume that its inclusion in the union as a territory would have been celebrated as a momentous occasion. However, Alaska in 1867, the year it was purchased, differed profoundly from the Alaska of today, as did the geopolitical considerations.

Motivated by the fur trade, Russia’s claim to Alaska began in the 1770s and became formal in 1799, when the Tsar Paul I established the Russian-American Company and gave it economic and political control over the territory. Over time, Russia had difficulty controlling the territory, and it became unprofitable. At its peak, the colony had only 800 Russians, who had difficulty communicating with the rest of the empire due to the distance from its capital, St. Petersburg. After losing in the Crimean War and facing financial difficulties, Alaska became too expensive to keep, and Russia feared that Great Britain would take over in a future conflict.

At the same time, manifest destiny had taken hold of the U.S. and interest in the north Pacific grew; the U.S. defined its border with Great Britain in the Oregon Territory in 1846 along the 49th parallel and gained control over California in 1848 after the Treaty of Guadalupe Hidalgo ended the Mexican-American War. Negotiations between the U.S. and Russia started before the Civil War, but really took off when Edouard de Stoeckl, Russia’s minister to the U.S. and a popular diplomat in Washington, met with Tsar Alexander and his advisors, who determined that he would offer the U.S. the opportunity to buy Alaska for at least $5 million. Stoeckl met with U.S. Secretary of State William Seward in 1867, who declared that even though President Andrew Johnson was “not inclined” toward the purchase, the president was willing to accept Seward’s judgment. After negotiations that involved Seward bidding against himself, both sides agreed on $7.2 million (about $119 million in U.S. dollars today). Eventually, the U.S. Senate approved the purchase by a vote of thirty-seven to two. Tsar Alexander ratified it on May 3, 1867, and President Johnson signed it on May 28.

The U.S. had added a new territory twice the size of Texas for the price of roughly two cents an acre, but at a time when the U.S. already had vast tracts of undeveloped western land, some did not see Seward’s vision. The purchase was ridiculed as “Seward’s Folly,” “Seward’s Icebox,” and President Johnson’s “polar bear garden” by members of the press and Congress, viewing it as barren land with little value. Seward was allegedly complicit in an effort to bribe congressmen and journalists to support the purchase.

It was only a few decades before the value of Alaska was realized. In 1896, the discovery of gold near the Klondike River in Canada’s Yukon territory near the border with Alaska motivated 100,000 miners to travel to the region, many taking ships to Skagway and Dyea in Alaska before trekking north. In the summer of 1899, over 8,000 miners traveled east from Dawson City in Yukon to Cape Nome in Alaska, chasing rumors of a new gold strike. Anvil City, later renamed Nome, reached an estimated population of 20,000 by 1900.

Just a couple of years later, the first commercial oil well in Alaska was completed at the remote settlement of Katalla by the Alaska Steam Coal & Petroleum Syndicate, which led to the territory’s first refinery. The 1957 discovery of oil north of Sterling at the Swanson River provided, according to Alaska’s first governor, William Egan, “the economic justification for statehood.” Despite these discoveries, Alaska remained relatively poor and dependent on federal subsidies. It was able to reverse its fortunes when, upon achieving statehood, the Alaska Statehood Act allowed the state to select 100 million acres of federal land to develop as it saw fit. The state chose the North Slope, a region with substantial oil reserves covered by permafrost. Oil was discovered in Prudhoe Bay in 1968, and began flowing in 1977, thanks to the construction of the 800-mile Trans-Alaska Pipeline to carry oil to Port Valdez in the Prince William Sound. Opponents waged a national campaign against the pipeline’s construction; however, it was eventually passed with the 1973 tie-breaking vote of Vice President Spiro Agnew in the U.S. Senate. The act included a provision banning further challenges under the National Environmental Policy Act. Since the pipeline was built, Prudhoe Bay has produced 17 billion barrels of oil.

Alaska has also been a boon for natural gas production. Discovered on the Kenai Peninsula in 1959 and in the Middle Ground Shoal in the Cook Inlet in 1963, natural gas in this region became the major fuel source for power generation for southcentral Alaskan communities. In 1969, ConocoPhillips began producing liquefied natural gas (LNG) for export to Japan from the Kenai LNG Facility, the U.S.’s only LNG export facility until 2016. Today, natural gas encompasses 58.5% of energy and 55.7% of electricity consumption in Alaska, and the state ranks fifth in the U.S. in gross natural gas withdrawals.

As with any state, Alaska’s energy story has involved peaks and valleys of production and regulation. Although Prudhoe Bay is the largest conventional oil field in North America and four of the U.S.’s top ten conventional producing oil fields are on the North Slope, oil production dropped 75% in 2020 from its peak of more than two million barrels per day in 1988 due to the maturation of conventional fields and regulatory barriers preventing producers from accessing new ones in the National Petroleum Reserve Alaska and Arctic National Wildlife Refuge. Many of the groups that opposed the original pipeline back in 1973 continue their opposition to additional oil production in areas of Alaska. Even if poor policy decisions stand in the way at times, Alaska’s potential for energy production — it holds almost 3.4 billion barrels of crude oil reserves, 125 trillion cubic feet of natural gas reserves, and 2.8 billion tons of coal reserves, according to the Energy Information Administration — makes its inclusion in the U.S. valuable for the country as a whole. And many believe its energy potential is much greater, but has yet to be cataloged because of limited exploration.

Clearly, Seward’s “Folly” was anything but. The purchase of Alaska gave the U.S. a territory worth a fortune based on its location and natural resources alone. Of course, Seward could not have predicted the progress the U.S. would make in developing Alaska. However, his decision reflected a positive, pro-growth vision for the future in which American ingenuity could transform millions of acres of largely undeveloped land into resources for human benefit. For providing the opportunity for future Americans to develop Alaska into an energy powerhouse, the purchase of Alaska deserves recognition as an American energy moment.

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This article is part of Fueling America: 250 Years of Energy Innovation, a special project by the Institute for Energy Research highlighting America’s unique role as a global energy innovator. To read more related content please visit Fueling250.org.

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The UAE withdrew from the Organization of the Petroleum Exporting Countries on May 1, allowing it to export more oil when it chooses rather than be tied to OPEC’s quotas. Before the conflict began on February 28, the UAE produced about 3.4 million barrels per day—roughly its quota—but output fell by more than half after the effective closure of the Strait of Hormuz forced the UAE to shut in some production. In May 2024, its capacity had reached 4.85 million barrels per day. The UAE is targeting 5 million barrels per day of capacity by next year, a goal brought forward by three years. According to its energy minister, the UAE could boost output capacity to 6 million barrels per day if necessary, which would put it on par with Canada and would overtake the 2024 oil production levels of China, Iraq, and Iran. ADNOC Drilling, a subsidiary of Abu Dhabi National Oil Company (ADNOC), is ready to deliver whatever capacity expansion ADNOC needs, according to its finance chief.

The port of Fujairah has been used not only for oil exports but also for non-oil exports and food imports. The 252-mile pipeline from Habshan to Fujairah has not been targeted in the war, but infrastructure at both ends of the route has. Iranian drones hit a gas-processing facility near the pipeline’s starting point at Habshan, and the port of Fujairah on the Gulf of Oman has sustained damage that has temporarily disrupted shipments in multiple attacks during the conflict. Saudi Arabia’s Red Sea port of Yanbu, where the East-West pipeline terminates, ​was also attacked. Recently, several tankers carrying oil from the UAE have transited through the Strait with location trackers switched off to avoid Iranian attacks.

Iran has effectively shut the ​Strait of Hormuz since the country was attacked by the United States and Israel on February 28, cutting off about a fifth ​of global oil and gas supplies. Energy prices have surged due to the disruption, prompting fuel rationing in some ⁠countries and fears of an economic downturn as inflation builds.

Analysis

The UAE has accelerated completion of the East-West Pipeline 1—an oil pipeline that would double its capacity, reaching 3.6 million barrels per day by 2027 and bypassing the Strait of Hormuz. Iran’s effective closure of the Strait has resulted in ships being stranded in the Middle East, raising oil and LNG prices as the area has been held captive by Iran. The new pipeline project was launched as part of the UAE’s strategy to enhance energy security and ensure uninterrupted exports to international markets amid tensions in the Middle East. The UAE withdrew from OPEC on May 1 and can now produce and export above its OPEC quotas. Before the conflict, it was producing 3.4 million barrels per day, and by next year it expects its oil production capacity to reach 5 million barrels per day.

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In the United States, for example, oil exports have climbed by a third to 5.2 million barrels a day in April after Iran effectively blocked ship traffic through the Strait of Hormuz. The Guardian reports that U.S. exports of jet fuel have doubled to a record high as Europe is looking to secure supplies and airlines are cutting flights. The United States is the world’s largest oil and natural gas producer and a major net exporter of both. While oil and gasoline prices have increased in the United States because oil is a global commodity, natural gas prices have not been affected, as they remain largely determined by U.S. supply and demand.

The U.S. decision to ease sanctions on Russian oil to assist with supplies helped the country to receive higher prices for oil it had already loaded onto tankers. Russia doubled its main source of oil tax revenue in April, keeping its economy from falling into a recession despite using part of the increase to keep domestic fuel prices from escalating. The increased revenues may be short-lived as Ukrainian attacks are hitting Russian infrastructure, and the easing of sanctions is likely only temporary.

South America has significant domestic oil and gas production, large renewable and hydropower resources, and several major sources of future oil and gas supply that lie outside the Gulf. Brazil, Guyana, and Argentina are expected to drive much of the growth in non-OPEC supply. Venezuela is also producing more oil after the United States captured Maduro and set up its new leadership. Venezuela’s oil exports have approached 1 million barrels a day in March, the highest level since 2019, and U.S. refiners that need heavy oil are capitalizing on those exports.

In the Middle East, most of Iran’s neighbors are suffering major losses. Saudi Arabia and the UAE have invested in pipelines to the Red Sea and the Gulf of Oman, allowing each to bypass the Strait of Hormuz for roughly half of its prewar exports. Iraq’s exports have fallen sharply. Kuwait has exported little oil or refined products for 10 weeks. Qatar’s liquefied natural gas exports are offline, and damage to some of the country’s export facilities during the conflict could take considerable time to repair. Iran is losing substantial oil exports as the U.S. blockade hinders crude oil shipments. Because its oil fields and export infrastructure on Kharg Island appear to have suffered relatively little damage to date, Iran may restore exports relatively quickly if and when the strait reopens.

As storage reaches capacity, Middle East producers have been forced to stop production of about 13 million barrels a day. Once the strait reopens, it could take months to restore that supply, especially in Iraq and Kuwait, where large mature fields and aging infrastructure make stoppages harder to reverse. According to Rystad Energy, restarting the Persian Gulf’s shuttered oil and gas fields and drone-damaged infrastructure is expected to cost between $34 billion to $58 billion, and some could take years to restart. So, other non-OPEC sources of supply will be needed, as well as non-Persian Gulf OPEC+ supplies.

China is a large net oil importer and has relied on oil imports from the Middle East, buying 90% of Iran’s oil exports. China’s April bill for crude oil imports rose 13% from a year earlier after it was shut off from exports from Iran and Venezuela. EIA reports that China holds 1,541 million barrels in strategic oil inventories as of the end of the first quarter 2026, 3.7 times the strategic oil inventories of the United States. China is curbing imports through the use of inventories and reduced refinery runs and is reselling crude oil it had contracted to buy to other countries, often at a profit.

China has been working to curb growth in oil consumption through electric vehicles, which accounted for half of all new domestic vehicle sales last year. It has also greatly increased its exports of renewable technologies, particularly solar panels. These have been aided by China’s dominance in mineral mining, especially in processing and refining, which are central to renewable energy. China’s exports of solar technology capacity doubled to a record high in March, the first month of the Iran crisis, to 68 gigawatts–more than Spain’s entire solar power capacity. Exports to Africa rose by 176%, compared with February, and exports to Asia doubled. Countries in the EU, including Italy and Poland, had record solar imports too.

Japan imports meet more than 85% of its energy consumption, and in 2025, nearly all its crude oil imports transited through the Strait of Hormuz. To get through the conflict, Japan has released the equivalent of about 70 days of its oil consumption from its strategic reserves. The Island is energy resource-poor and is heavily dependent on maritime trade for essential goods. Energy security has long been a policy concern in Japan and may result in the country restarting more nuclear reactors and using more coal.

India imports nearly 90% of the crude oil it consumes, with half coming from countries that depend on the Strait of Hormuz for transit before the conflict with Iran began. It is importing oil from Russia—but not at the steep discounts it enjoyed after Russia’s invasion of Ukraine, when sanctions on Russian oil were in effect.

Analysis

The conflict with Iran has led to a reduction in oil supply from the Middle East and higher oil prices. Some non-Middle East oil-producing countries have been able to insulate themselves from the price shocks and are producing more oil to supplement the global market. Asian countries have been hit the hardest due to their heavy reliance on oil supplies from the Middle East. The conflict will most likely lead countries to place greater emphasis on the security of supply.

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More than 70% of the Bridger pipeline would be built within existing pipeline corridors and 80% on private land, so it is not expected to cross any Native American reservations. The proposal seeks to build the pipeline alongside existing pipeline infrastructure, which could make it easier to obtain required permits. The 36-inch line would carry various grades of oil for export or refining in the United States. U.S. refineries use Canadian heavy oil, and many were retooled from processing light oil to heavy oil before the shale oil renaissance that produced volumes of U.S. light oil. Canada is our largest supplier of imported oil. The Bridger pipeline is also authorized to carry other petroleum products, including gasoline, kerosene, diesel, and liquefied petroleum gas.

The Casper, Wyoming-based company, True Companies, operates more than 3,700 miles of gathering and transmission pipelines in the Williston Basin of North Dakota and Montana and the Powder River Basin of Wyoming. True Companies is overseeing the Bridger Pipeline Expansion project’s permitting, construction planning, and safety tech, including its AI-driven leak-detection system, FlowState. Bridger Pipeline developed an AI-based leak detection system that enables it to be notified more quickly of any problems. It also plans to drill 30 to 40 feet below major rivers, including the Yellowstone and the Missouri, to reduce the risk of an accident.

The route of the proposed Bridger pipeline would originate near Keystone XL’s planned border crossing. In Canada, sections of the Keystone XL pipeline were completed before the project was canceled and the pipe was left in the ground, leaving open the prospect that those segments could be used and connected to Bridger. Bridger could revive about 93 miles of track on the Canadian side that were built and are sitting idle, which would reduce construction costs and impacts.

Bridger would increase Canada’s oil exports to the United States by more than 12%, bringing much-needed pipeline takeaway capacity to Canada. Oil companies have committed to move at least 400,000 barrels per day, or about 72% of the pipeline’s initial capacity. The company is seeking long-term contracts for 450,000 barrels per day in committed capacity to green-light the project, which is 80% of the initial capacity that pipeline operators typically require before moving ahead with construction. Reuters reports that the project would eventually increase ​to 1.13 million barrels per day. According to analysts, the current project is not an end market for oil, so additional links would need to be built to refining hubs such as Cushing, Oklahoma; Patoka, Illinois; and the U.S. Gulf Coast.

Canada’s Oil Has Been Landlocked

Canadian oil, produced in Alberta, has been landlocked and is looking for outlets. After President Biden withdrew the Presidential permit for the Keystone XL pipeline, Canada built the Trans Mountain pipeline expansion from Alberta to British Columbia to carry oil and petroleum products. The Trans Mountain pipeline carries oil to the Pacific Coast, where it can be loaded onto tankers for export, opening up markets for Canadian oil along the U.S. West Coast and in Asia. The expanded Trans Mountain pipeline was completed and went online on May 1, 2024, with its capacity tripled to 890,000 barrels per day, comparable to that of the Keystone XL pipeline. Before that, the U.S. Midwest was the major market for Canadian oil, importing 90%, around 4 million barrels per day, of Canada’s oil via North-South pipelines from its main oil-producing region of Alberta. The Trans Mountain pipeline is planning a series of enhancements that could increase its capacity by 360,000 barrels per day.

The commitments by Canadian oil producers for the Bridger pipeline expansion, however, show the additional need for takeaway capacity for the country’s oil. Other expansions are underway. Reuters reports that last fall, Enbridge ​approved expansions for its Mainline and Flanagan ⁠South pipelines, which will allow an additional 150,000 barrels per day of Canadian heavy oil to move to the U.S. Midwest and Gulf Coast. That expansion is expected to come online in 2027.  The company is also assessing commercial interest in a second phase of its Mainline expansion of 250,000 barrels per day, which ​could be in service in 2028.

Analysis

President Trump has approved a Presidential permit allowing construction of the Bridger pipeline expansion to cross the border between Saskatchewan, Canada, and northeastern Montana. The 650-mile pipeline would move about two-thirds as much oil as the Keystone XL pipeline, which was partially built before President Biden withdrew its Presidential permit in 2021. U.S. refineries are equipped to process the heavy oil that Canadian imports provide. In addition to oil, the proposed pipeline is authorized to carry petroleum products, including gasoline, kerosene, diesel, and liquefied petroleum gas. The pipeline has almost all the commitments from oil companies that it needs and plans to be built on existing pipeline corridors and private land, avoiding issues from potential protesters. It plans to be operational by the end of 2028 or very early 2029, hopefully before President Trump’s term ends.

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