The US Energy Information Administration (EIA) has revised up its average oil price forecast for this year, but expects oil prices in 2026 to be lower than in 2025 as global oil production exceeds demand, leading to inventory builds.
In its Short-Term Energy Outlook (STEO) released late Tuesday, the EIA raised its average Brent crude price forecast to $57.69 per barrel, up from $55.87, while West Texas Intermediate (WTI) was revised to $53.42 per barrel from $52.21.
The agency expects oil prices to decline in 2026 to roughly 18% below 2025 levels, "as global oil production exceeds global oil demand, causing oil inventories to rise," EIA said.
For 2027, EIA projects Brent crude to average $53 per barrel and WTI to average $49.34 per barrel.
Markets also reacted to uncertainty around recent US policy toward Iran, with oil prices edging higher and becoming more volatile, the agency said.
Iran's crude oil production has remained stable so far, the agency said, adding it expects output to stay steady in its forecast, while warning that any attacks on oil infrastructure or a conflict disrupting flows through the Strait of Hormuz could sharply reduce Middle East oil production and exports.
- Inventories rising, prices easing through 2027
Unplanned disruptions to crude oil production in the US and Kazakhstan tightened near-term global supplies in January and pushed crude prices higher, the agency said.
In the US, freezing temperatures cut output by an estimated 320,000 barrels per day (bpd). In Kazakhstan, power outages at the giant Tengiz oilfield, along with a drone attack and severe weather affecting exports through Novorossiysk, Russia, reduced production by more than 400,000 bpd.
Total unplanned global disruptions rose for a second consecutive month to nearly 3 million bpd, the highest level since September 2024.
At the same time, colder weather across the Northern Hemisphere boosted oil demand, adding to upward pressure on prices.
Despite near-term tightness from disruptions in the US and Kazakhstan, the agency assesses that strong global oil production growth will continue to outpace oil consumption over its forecast, driving its assessment that global oil inventories will increase.
The agency said that this trend will continue in both 2026 and 2027. The agency forecasts that global oil inventory builds will average 3.1 million bpd in 2026, compared with an average build of 2.7 million bpd in 2025, before decreasing to an average of 2.7 million bpd in 2027.
Although the agency expects prices to fall in 2026 and remain under $60 a barrel in 2027, it assesses that OPEC+ policy and China's continued strategic stockpiling will help limit the decline.
"A large portion of oil inventory builds last year were in strategic stockpiles in China, which limited downward price pressures because these builds acted as a source of demand," it added.
The agency said it assumes China will continue building strategic stockpiles at roughly the same pace of about 1 million barrels a day in 2026, before slowing the buildup in 2027.
- Venezuela uncertainty clouds oil outlook
The evolving situation in Venezuela remains a key uncertainty in the agency's forecast.
The oil blockade and the interception of sanctioned tankers near Venezuela halted a large share of the country’s crude exports in December, forcing production shut-ins.
Reports show that exports rebounded in January after licenses were granted to trading firms Vitol and Trafigura to ship Venezuelan oil.
Much of that crude, previously destined for China, was diverted to storage terminals across the Caribbean, with US Gulf Coast refineries seen as the most likely final destination.
US crude oil output is forecast to average 13.60 million bpd in 2026, up from the 13.59 million bpd projected in the previous report.
For 2027, production is expected to average 13.32 million bpd.
Meanwhile, global oil production for this year is forecast to average 107.85 million bpd and consumption is estimated to reach 104.79 million bpd.
In 2027, global supply is expected to reach an average of 108.75 million bpd, with consumption rising to 106.07 million bpd.
By Handan Kazanci
Anadolu Agency
energy@aa.com.tr
