EIA cuts oil price forecasts for 2027
The US Energy Information Administration (EIA) expects the Brent crude spot price to average $85/bbl in the third quarter of 2026, before declining to around $69/bbl in 2027.
IMAGE: Oil storage facility. Getty Images
The EIA forecasts Brent crude’s price to stay elevated this year, amid the ongoing Middle East conflict that has turmoiled global markets and sharply reduced vessel movement through the Strait of Hormuz.
The agency estimates that crude oil and petroleum liquids transported through the Strait of Hormuz averaged 4.9 million b/d in the second quarter of this year, down from an average of 21.6 million b/d in the fourth quarter of 2025.
“Reduced oil shipments through the Strait of Hormuz lower global oil inventories further in the coming months and keep crude oil prices near levels from the first week of August,” the EIA said.
The US energy agency emphasised that its price forecast remains highly sensitive to the projected duration of the conflict between the US, Israel and Iran, and the subsequent impact on oil production.
The EIA expects the Strait of Hormuz to remain effectively closed in the current quarter, with flows remaining “severely constrained” in August.
The ongoing conflict in the region will continue to disrupt about 600,000 b/d through the end of this year, the agency said.
“We expect most crude oil production in the region to return to near pre-conflict averages in early 2027,” the energy agency said in its August short-term energy outlook (STEO) report.
Supply and demand estimates
Global liquid fuels production is expected to reach 100.82 million b/d in 2026 – about 1.07 million b/d lower than the EIA’s previous estimate.
Production shut-ins averaged 5.5 million b/d in July, as storage levels reach maximum limits requiring producers to shut in additional volumes.
“This assumption is prompting us to raise our forecast of shut-in crude oil production in August, further reducing inventories,” the EIA said.
In 2027, total liquid fuels production is projected to touch 109.74 million b/d – 100,000 b/d lower than the EIA’s May estimates. The US agency expects most production shut-ins to be restored by early-2027 and oil inventories to restart building.
OPEC's liquid fuels production is expected to average around 24 million b/d this year – about 1.09 million b/d lower than the EIA’s previous projection. The Saudi Arabia-led coalition is expected to increase production to 29.67 million b/d in 2027, the US-based agency said.
The US energy agency forecasts global oil demand to reach 102.73 million b/d in 2026 – about 5,000 b/d lower than its previous forecast.
Oil demand growth is expected to rebound in 2027 to around 104.96 million b/d, as oil flows are expected to resume.
By Aparupa Mazumder
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