EIA Cuts Oil Price Forecasts for 2027 Amid Escalating Conflict
The US Energy Information Administration (EIA) has revised its oil price forecasts for 2027, predicting Brent crude will average $74/bbl next year. This is down from an estimated $90/bbl in the second half of 2026, which is expected to be driven by escalating conflict in the Middle East.
The EIA notes that constrained flows through strategic waterways such as the Strait of Hormuz and the Bab al-Mandeb have contributed to rising global oil prices. Additionally, declining global crude oil inventories, estimated to have decreased by 400 million bbls so far this year, are putting further upward pressure on prices.
The agency emphasizes that its price forecast remains highly sensitive to the duration of the conflict between the US, Israel and Iran, and its impact on oil production. However, as shipping companies continue to find workarounds to export oil from the Middle East, oil flows out of the region are expected to gradually increase.
In 2027, global liquid fuels production is projected to touch 109.88 million b/d, a significant increase from this year's estimated 100.62 million b/d. The EIA also expects OPEC's liquid fuels production to average around 29.39 million b/d in 2027, up from an estimated 23.59 million b/d this year.