EIA Lifts Oil Price Forecast Amid Strait of Hormuz Disruptions

The US Energy Information Administration (EIA) has raised its oil price forecast for the third quarter, citing ongoing disruptions in the Strait of Hormuz. Brent crude is now expected to average $86.81 per barrel this year, up from the previous forecast of $81.91. WTI crude is forecast to average $80.88 per barrel, compared with its previous forecast of $76.26.

The EIA expects severe disruptions to oil shipments through the Strait of Hormuz to continue throughout August. Oil flows through the strait fell to 4.9 million bpd in the second quarter of this year, from 21.6 million bpd in the fourth quarter of last year. The outlook was also affected by a new threat to block Saudi oil exports through the Bab el-Mandeb Strait.

Global inventories are estimated to have fallen by 4.2 million bpd in the second quarter and are expected to decline by 3.8 million bpd in the third quarter. Brent is forecast to average $85 per barrel in the third quarter, $11 higher than the previous forecast, before falling to $78 in the fourth quarter as tanker traffic and production recover.

US crude oil production is expected to average 13.8 million bpd this year, up from the previous forecast of 13.78 million bpd. Next year, production is projected to average 14.15 million bpd, compared with the previous forecast of 14.03 million bpd.