EIA Raises Oil Price Forecasts Amid Iran War Disruptions

The US Energy Information Administration (EIA) has raised its oil price forecasts for 2023 and 2024, citing falling global stockpiles and tight diesel markets driven by the ongoing Iran war. The agency now expects the global benchmark Brent crude to average about $105 a barrel in the fourth quarter, up $14 from its previous estimate. This sharp increase reflects the ongoing disruptions in oil flows through the Strait of Hormuz, a critical route for about 20% of global oil supplies before the war.

Attacks on Saudi Arabia’s East-West Pipeline, a vital export route, have further heightened concerns over supply disruptions. The EIA noted that exceptionally tight diesel supplies are boosting demand for crude as refiners work to maximize diesel production. As a result, global inventories are expected to remain low, keeping crude prices elevated.

The EIA also forecasted that US retail diesel prices, which hit record highs last month, will remain above $6 a gallon in October before gradually easing to an average of roughly $4.50 a gallon by 2027. For 2026, Brent crude prices are now expected to average about $98 a barrel, an 8% increase from the EIA’s prior forecast. Oil prices have surged more than 37% since the war began on February 28.

Despite the challenges, the EIA expects Middle East oil production and exports to gradually recover as transit through the Strait of Hormuz improves and producers adopt alternative export routes. By 2027, Brent crude prices are projected to average $84 a barrel, $10 above the prior forecast. The agency also anticipates US oil production to rise to a record 14.3 million barrels per day in 2027, up from 13.9 million barrels per day in 2026.