EIA raises oil price forecasts amid Iran war disruptions

The US Energy Information Administration (EIA) has revised its oil price forecasts upward for 2026 and 2027, citing the impact of the Iran war on global stockpiles and diesel markets. The agency now expects Brent crude to average $98 per barrel this year, an 8% increase from its previous forecast. The ongoing conflict has disrupted oil flows through the Strait of Hormuz, which historically carried 20% of global oil supplies, and has led to attacks on regional energy infrastructure.

Brent crude is forecast to average $105 per barrel in the fourth quarter of 2026, $14 higher than the EIA’s prior estimate. US retail diesel prices, which hit record highs last month, are expected to remain above $6 per gallon in October before gradually easing to an average of roughly $4.50 per gallon in 2027. The EIA attributes these price increases to falling global inventories and tightening diesel supplies.

Despite the current disruptions, Middle East oil production and exports are expected to gradually recover as transit through the Strait of Hormuz improves and producers shift to alternative export routes. Measures such as Saudi Arabia restarting shipments through its East-West Pipeline and the use of dark transits have helped restore Gulf oil flows to more than 81% of pre-war levels. As these workarounds expand, crude production shut-ins are expected to fall from 4.5 million barrels per day in the fourth quarter of 2026 to 2.7 million bpd in the first quarter of 2027.

The EIA forecasts that Brent crude will average $84 per barrel in 2027, $10 above its prior forecast, as flows recover and inventories rebuild.