EIA cuts oil price forecasts for 2027

The US Energy Information Administration (EIA) expects the Brent crude spot price to average $90/bbl in the second half of 2026, before declining to around $74/bbl in 2027.

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The EIA forecasts Brent crude’s price to stay elevated this year, amid escalating conflict in the Middle East that has disturbed the global oil market and sharply restricted maritime traffic through the Strait of Hormuz.

Constrained flows through the Strait of Hormuz and the Bab al-Mandeb Strait and crude oil production shut-ins have ticked up over the past month, the EIA noted.

The declining global crude oil inventories – which the EIA estimates have decreased by 400 million bbls so far this year – have put further upward pressure on prices, the EIA said.

“We expect inventories will continue falling through the end of 2026, which will keep prices near the August monthly average in the coming months,” the energy agency added.

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.

Oil flows out of the Middle East will gradually increase as shipping companies “continue to find workarounds that allow them to export oil from the Middle East,” by using pipeline and overland bypass routes, increasing ship-to-ship transfers, and new bypass pipeline capacity in the UAE, expected to come online in mid-2027, the energy agency said in its September short-term energy outlook (STEO) report.

Supply and demand estimates

Global liquid fuels production is expected to reach 100.62 million b/d in 2026 – about 200,000 b/d lower than the EIA’s previous estimate.

Crude oil production shut-ins averaged 6.7 million b/d in August, up from 5.0 million b/d in July, the EIA assessed.

The reduction in oil flows from the Middle East is expected to remain constrained through the fourth quarter of 2026 – leading to shut-in production volumes averaging 5.7 million b/d, the agency said.

“Global crude oil prices rose in August as total exports out of the Middle East remained constrained, leading to more oil production shut-ins in the region,” the EIA said.

In 2027, total liquid fuels production is projected to touch 109.88 million b/d – 140,000 b/d higher 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 23.59 million b/d this year – about 410,000 b/d lower than the EIA’s previous projection. The Saudi Arabia-led coalition is expected to increase production to 29.39 million b/d in 2027, the US-based agency said.

The US energy agency forecasts global oil demand to reach 102.59 million b/d in 2026 – about 140,000 b/d lower than its previous forecast.

Oil demand growth is expected to rebound in 2027 to around 104.98 million b/d, as oil flows are expected to resume.

By Aparupa Mazumder

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