EIA Raises Oil Price Forecasts Amid Middle East Tensions and Tight Supplies

The US Energy Information Administration (EIA) has raised its oil price forecasts for 2026 and 2027, citing declining global inventories and ongoing tensions in the Middle East. The EIA now expects global benchmark Brent crude to average around $98 per barrel this year, up 8% from its previous estimate. The agency attributes this increase to the US-Israeli war on Iran, which has disrupted oil flows through the Strait of Hormuz, a critical waterway that previously carried about one-fifth of global oil supplies.

The EIA's Short-Term Energy Outlook also highlights the tight diesel market, with US retail diesel prices expected to remain above $6 per gallon in October before gradually easing to an average of $4.50 per gallon in 2027. Brent crude is projected to average $105 per barrel in the fourth quarter of 2026, $14 higher than the agency's prior estimate. The disruption in the Strait of Hormuz has led to attacks on regional energy infrastructure, further tightening supplies.

Despite the current challenges, the EIA anticipates a gradual recovery in Middle East oil production and exports. As transit through the Strait of Hormuz improves and alternative export routes, such as Saudi Arabia's East-West Pipeline, are utilized, crude production shut-ins are expected to decline. By the first quarter of 2027, shut-ins are projected to decrease from 4.5 million barrels per day to 2.7 million barrels per day. This recovery is expected to bring Brent crude prices down to an average of $84 per barrel in 2027, $10 above the previous projection.

The EIA's report also includes an interactive table detailing major oil companies, including Saudi Aramco, China National Petroleum Corp, and ExxonMobil, among others. These companies play significant roles in global oil production and distribution, and their operations are crucial to the market's stability and recovery.