EIA raises oil price forecasts for 2027
The US Energy Information Administration (EIA) expects the Brent crude spot price to average $105/bbl in the fourth quarter of 2026 before declining to around $84/bbl in 2027.
IMAGE: Oil storage tanks. Getty Images
The EIA forecasts Brent crude’s price to stay elevated this year, amid escalating Middle East hostilities that have rattled global energy markets and choked maritime transit through the Strait of Hormuz.
Declining oil flows through critical chokepoints including the Strait of Hormuz and Bab al-Mandeb Strait, coupled with mounting crude production shut-ins, have accelerated over the past months, the EIA noted.
Moreover, the attacks on the East-West pipeline in Saudi Arabia has highlighted the “potential for continued volatility in physical oil flows and oil prices,” the EIA said.
Declining global crude oil inventories, which the EIA estimates have decreased by an average of 1.9 million b/d in the third quarter of this year, have put further upward pressure on oil prices, the EIA said.
The US energy agency also emphasised that its price outlook remains closely tied to the duration of the US-Israel conflict with Iran and its ultimate impact on crude production.
Although oil flows from the Middle East are expected to remain constrained through the fourth quarter of this year, the situation is expected to gradually improve as shipping companies continue to find workarounds to export oil from the region.
“We estimate that regional shut-in production in September was the lowest since the onset of hostilities,” the EIA said.
Notably, the Middle East conflict has made oil companies increasingly reliant on pipeline and overland bypass routes, ship-to-ship transfers, and additional bypass pipeline capacity in the UAE, which is expected to come online in mid-2027.
“Despite ongoing constraints, we assume that a combination of convoys through the Strait of Hormuz and workarounds to oil exports from the Middle East… will lead to production and exports from the region generally increasing through the forecast period,” the energy agency said in its October short-term energy outlook (STEO) report.
Supply and demand estimates
Global liquid fuels production is expected to reach 101.09 million b/d in 2026 – about 470,000 b/d higher than the EIA’s previous estimate.
Crude oil production shut-ins averaged 4.8 million b/d in September, down from 5.8 million b/d in August, the EIA assessed.
“We estimate that oil exports from the Middle East increased in September compared with August despite the increase in attacks,” the EIA said.
In 2027, total liquid fuels production is projected to touch 109.55 million b/d – 333,000 b/d lower than the EIA’s September estimates. The US agency expects most production shut-ins to be restored by the end of the second quarter of 2027 and oil inventories to restart building.
OPEC's liquid fuels production is expected to average around 23.93 million b/d this year – about 340,000 b/d higher than the EIA’s previous projection, the US-based agency said.
The US energy agency forecasts global oil demand to reach 102.43 million b/d in 2026 – about 160,000 b/d lower than its previous forecast.
Oil demand growth is expected to rebound in 2027 to around 104.64 million b/d.
By Aparupa Mazumder
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