EIA Boosts Oil Price Forecasts Amid Iran War-Driven Supply Crunch

The US Energy Information Administration (EIA) has raised its oil price forecasts for this year and next, citing the ongoing Iran war as a major contributor to the decline in global stockpiles.

Global oil inventories have fallen by approximately 400 million barrels so far this year, and are expected to drop further through the end of the year due to significant amounts of Middle Eastern output and export volumes remaining offline. The EIA now expects global benchmark Brent crude oil prices to average around $91 a barrel in the spot market this year, a nearly 5% increase from its prior forecast.

The agency also predicts that U.S. West Texas Intermediate crude prices will average $84.65 a barrel this year, also a nearly 5% hike from its previous forecast.

The EIA notes that oil flows from the Middle East are expected to rise in the coming months due to increasing Strait of Hormuz shipments and exporters utilizing more workarounds like ship-to-ship transfers, but warns that both Hormuz flows and these workarounds remain beholden to developments in the conflict.