Key takeaways
- The EIA has increased its Brent and WTI price forecasts for this year and next amid rapidly falling global inventories.
- Global stocks have declined by about 400 million barrels year-to-date, and Middle East shut-ins remain elevated.
- The agency warns that recovery of regional output and exports to pre-conflict levels is not expected until the second quarter of next year.
The U.S. Energy Information Administration has revised upward its oil price projections for the current year and the following year, citing a steep reduction in worldwide inventories tied to lost Middle Eastern supply amid the ongoing Iran conflict. In its Short-Term Energy Outlook, the agency points to a near-term supply shortfall that has pushed oil and fuel prices markedly higher.
The EIA reported that global oil inventories have fallen by roughly 400 million barrels so far this year and are projected to decline further through the end of the year as sizable portions of Middle Eastern production and export capacity remain offline. Those offline volumes reflect shut-ins and disruptions linked to the conflict dynamics in the region.
As a result, the agency now anticipates that the global benchmark Brent crude will average about $91 a barrel in the spot market this year, which the EIA describes as nearly a 5% increase from its prior forecast for 2026. For U.S. West Texas Intermediate crude, the EIA raised its expected annual average to $84.65 a barrel, likewise nearly 5% above its earlier projection.
The report notes that some restoration of flows is expected in the coming months, driven by gradually increasing shipments through the Strait of Hormuz and by exporters making greater use of alternate arrangements such as ship-to-ship transfers. However, the EIA cautioned that both the resumption of Hormuz shipments and the effectiveness of workaround measures remain dependent on how the conflict evolves.
The agency finalized the outlook on September 3, before a subsequent escalation in regional tensions. Since that drafting, exchanges of attacks between the U.S. and Iran on shipping and energy infrastructure have continued, contributing to an uptick in Brent crude prices that pushed them above $100 a barrel on Wednesday.
On the supply side, the EIA reported a rise in Middle East oil output shut-ins to 6.7 million barrels per day in August, up from 5.0 million bpd in July. The increase was driven in part by attacks affecting Saudi Arabian exports through the Bab el-Mandeb corridor and by a reduction in ship departures from the Yanbu port on the Red Sea, the agency said.
Looking ahead, the EIA expects Middle East output shut-ins to average roughly 5.7 million bpd during the fourth quarter. The agency also projects that regional production and export activity will not return to pre-conflict levels until the second quarter of next year.
These dynamics—declining inventories, elevated shut-ins, and higher near-term price forecasts—underscore the EIA’s view that the conflict’s disruption of Middle Eastern supply is the dominant factor driving the latest revisions. The report emphasizes that any sustained recovery in flows depends on developments on the ground and the ability of market participants to execute and maintain workaround logistics.
Market participants and sectors exposed to crude and refined fuels will continue to monitor the trajectory of regional shipments, shut-in volumes, and the effectiveness of alternative export routes as determinants of price direction and inventory replenishment timing.