The US Energy Information Administration (EIA) has raised its average oil price forecast for 2026, citing heightened geopolitical tensions and disruptions to oil shipments through the Strait of Hormuz.
In its Short-Term Energy Outlook (STEO) released late Tuesday, the EIA raised its average Brent crude price forecast to $78.84 per barrel, up from $57.69, while West Texas Intermediate (WTI) was revised to $73.61 per barrel from $53.42.
For 2027, the EIA expects Brent crude to average $64.47 per barrel, while WTI is projected to average $60.81 per barrel.
Oil prices surged after military action began in the Middle East on Feb. 28. Brent crude climbed from an average of $71 per barrel on Feb. 27 to $104 on March 9, as tensions in the region raised concerns about potential supply disruptions.
Although damage to oil infrastructure remained limited, the Strait of Hormuz, a key route for global energy shipments, was effectively closed to most shipping, pushing prices higher as markets priced in rising geopolitical risk.
- Hormuz disruption key risk
According to the EIA, the main factor that could push prices higher is a prolonged disruption in traffic through the Strait of Hormuz, a major oil transit chokepoint that carries nearly 20% of global oil supply.
While the strait has not been physically blocked, the risk of attacks and the cancellation of insurance coverage have prompted most tankers to avoid the route. As a result, some oil production in the region has already been shut in.
The agency assumes that shut-in production will peak in early April, mainly in Iraq, with smaller volumes in Kuwait, the United Arab Emirates and Saudi Arabia, before gradually easing as shipments resume.
"We make the further assumption that shut-in production will gradually ease as transit through the Strait resumes," it added.
The EIA expects near-term supply disruptions and a persistent risk premium to keep Brent prices averaging around $91 per barrel in the second quarter of 2026.
However, once flows through the Strait of Hormuz return to normal, global oil supply is expected to outpace demand again, leading to inventory builds that could weigh on prices later in the forecast period, the agency added.
Global oil inventories are projected to increase by an average of 1.9 million barrels per day (bpd) in 2026 and 3 million bpd in 2027. As a result, the EIA expects Brent prices to fall to around $70 per barrel by the fourth quarter of 2026 and to average $64 per barrel in 2027.
- Global oil production to average 107.04 million bpd
The EIA also forecasts US crude oil production to average 13.6 million bpd in 2026, rising to 13.8 million bpd in 2027.
Meanwhile, global oil production is expected to average 107.04 million bpd in 2026, while consumption is estimated at 105.17 million bpd.
In 2027, global supply is forecast to reach 109.61 million bpd, with demand rising to 106.61 million bpd.
Separately, OPEC+ agreed on March 1 to start increasing production by 206,000 bpd in April 2026 in response to lower oil inventories, with the next decision on output policy expected on April 5.
The EIA said it does not expect the group to significantly raise production targets for 2027 given projections of substantial inventory builds over the forecast period.
By Handan Kazanci
Anadolu Agency
energy@aa.com.tr
