EIA Raises Oil Price Forecasts as Iran War Drains Global Stockpiles

The U.S. Energy Information Administration raised its oil price forecasts for 2026 and 2027 on Tuesday, citing rapidly falling global inventories and tight diesel markets amid the ongoing Iran war. Brent crude is now expected to average about $98 a barrel in 2026, up 8% from the prior forecast. The EIA's Short-Term Energy Outlook projected Brent averaging about $105 a barrel in the fourth quarter, $14 above its previous estimate, with U.S. retail diesel prices staying above $6 a gallon in October before easing to roughly $4.50 a gallon in 2027. The war has disrupted flows through the Strait of Hormuz, which carried about 20% of global oil supplies before the conflict. Middle East production and exports are expected to recover gradually as Saudi Arabia restarts shipments through its East-West Pipeline to the Red Sea and exporters adopt alternative routes. Gulf oil flows excluding Iran reached more than 81% of pre-war levels in September, and shut-in production is forecast to fall from 4.5 million bpd in the fourth quarter of 2026 to 2.7 million bpd in early 2027. Brent is expected to average $84 a barrel in 2027.