March 10 - The U.S. Energy Information Administration (EIA) said in its monthly Short-Term Energy Outlook that Brent crude is likely to trade above $95 a barrel for the next two months as ongoing disruptions linked to the Iran conflict restrict shipments. The EIA projected that Brent would then fall, reaching about $70 a barrel by the end of the year.
The agency said oil tankers have been largely prevented from transiting the Strait of Hormuz, a key maritime chokepoint through which roughly one-fifth of global oil moves each day. Those transport constraints are expected to push Middle Eastern oil output lower in the coming weeks, the EIA said.
Saudi Arabia has initiated production cuts, according to sources cited by the EIA, joining other Gulf producers including Iraq and Kuwait in trimming output amid the transit limitations. The report said those production cutbacks will be gradually relaxed as shipping through the Strait resumes.
Once flows through the Strait of Hormuz are reestablished, the EIA said global oil supply would again outpace demand. For the nearer term, however, the agency raised its price outlook: Brent futures have climbed about 21% so far this month, with Brent last quoted at $88 a barrel at 12:35 p.m. EST in the data included with the report.
In its updated forecasts the EIA increased its Brent price projection for 2026 by 37% from the prior month, to $79 a barrel. It also indicated Brent should fall below $80 a barrel in the third quarter of this year as market conditions normalize.
The agency raised retail fuel price estimates in response to the higher oil outlook. U.S. retail gasoline is forecast to average about $3.34 a gallon, a 14.7% increase from the agency's previous forecast. Diesel prices were pushed up to $4.12 a gallon, roughly 20.1% higher than the prior outlook.
"Although we expect most of the gasoline price increase to be passed through to the retail price in the coming weeks, we also expect that the normalization of refining and retail margins will occur more slowly. The net effect will be continued upward pressure in the second quarter that lags behind the initial increase," the EIA said in the report.
The EIA said higher oil prices will spur additional U.S. crude output. It forecast U.S. production to average 13.61 million barrels per day this year, increasing to 13.83 million barrels per day in 2027. Those projections compare with the agency's previous forecasts of 13.6 million bpd for 2026 and 13.32 million bpd for 2027.
U.S. crude futures have also risen sharply, up about 25% so far this month, with U.S. crude last trading near $83.60 a barrel at 12:25 p.m. EST in the figures reported alongside the EIA outlook.
The EIA's findings underline a near-term squeeze on supply tied to the Strait of Hormuz disruptions, higher short-term prices for crude and refined products, and an expectation that production adjustments will ease once transit resumes, enabling supply to outpace demand later in the outlook period.
Summary of implications
- Short-term oil and fuel price increases driven by blocked shipments through the Strait of Hormuz.
- Elevated U.S. gasoline and diesel retail price forecasts reflecting higher crude prices and slower margin normalization.
- Modest upward revision to medium-term U.S. crude production forecasts as higher prices encourage additional supply.