EIA Boosts 2026 Brent Oil Price Projection to $96

The U.S. Energy Information Administration (EIA) increased its 2026 Brent oil price projection in its latest short term energy outlook (STEO), which was published on April 7.

In its April STEO, the EIA forecast that the Brent spot price will average $96.00 per barrel this year. The EIA’s previous STEO, which was published in March, saw the Brent spot price averaging $78.84 per barrel in 2026.

A quarterly breakdown included in the EIA’s latest STEO projected that the Brent spot price will come in at $114.60 per barrel in the second quarter of this year, $99.80 per barrel in the third quarter, and $88.00 per barrel in the fourth quarter. In its March STEO, the EIA projected that the commodity would average $90.56 per barrel in the second quarter, $75.45 per barrel in the third quarter, and $70.00 per barrel in the fourth quarter.

The EIA’s April STEO sees the Brent spot price averaging $76.09 per barrel in 2027. In its previous STEO, the EIA projected that the Brent spot price would average $64.47 per barrel next year.

The forecast for the EIA’s latest STEO was completed before the announcement of what Naeem Aslam, CIO at Zaye Capital Markets, described as a “two-week Strait of Hormuz ceasefire”. Aslam highlighted, in a statement sent to Rigzone on April 8, that WTI and Brent were down 13-15 percent intraday “as … [the] ceasefire triggers a rapid unwind of geopolitical risk premium following the $110+ spike”.

The EIA stated in its April STEO that global oil markets “are in a period of heightened volatility and uncertainty due to the de facto closure of the Strait of Hormuz, a major world oil transit chokepoint through which nearly 20 percent of global oil supply flows”.

“The strait has been effectively closed to shipping traffic since military action began on February 28. The Brent crude oil spot price averaged $103 per barrel in March, $32 per barrel higher than the average in February, and daily Brent crude oil prices reached almost $128 per barrel on April 2,” the EIA highlighted.

“The closure of the strait has dramatically reduced the availability of oil supplies to global markets and has had cascading effects across oil supply chains,” it warned.

In its latest STEO, the EIA noted that, prior to the U.S.-Iran conflict, its assessment was that the global oil market was oversupplied and that global oil inventories were building quickly, which the EIA said was reflected in steadily falling oil prices over the previous year.

“We expected this trend to continue over the next two years, as strong growth in production from both non-OPEC+ producers and increased production targets from OPEC+ countries outpaced growth in global oil demand,” the EIA said in the STEO.

“However, the conflict in Iran has quickly shifted market dynamics, as producers in the region have been forced to shut in significant volumes of oil production, leading to near-term tightness in the market,” it added.

The EIA highlighted in its STEO that, previously, it assumed there would be a one month disruption to oil flows and resulting shut-in of oil production of about 5.5 million barrels per day, peaking in March.

“We expected the well-supplied market at the onset of the conflict would keep oil prices from exceeding $100 per barrel on a monthly average basis if the conflict was resolved quickly,” the EIA added.

“However, as the conflict and the closure of the Strait of Hormuz have persisted beyond our initial assumptions, we note that global oil inventories have drawn down sharply and shut-in oil production volumes have increased, raising our oil price forecast for the coming months,” it continued.

“In addition, we expect that disruptions will continue through late 2026, putting upward pressure on prices over that period,” it noted.

“Further, escalating attacks on energy infrastructure around the region and uncertainty about the ultimate duration of the conflict and the effective closure of the Strait of Hormuz lead us to assess that oil prices will reflect a larger risk premium throughout the forecast,” the EIA went on to warn.

The EIA stated in its April STEO that, once flows through the Strait of Hormuz resume, it assumes it “will take time to resolve the backlog and disruption to oil tanker routes and trade flows and that the potential for future disruptions will remain at risk and create a premium in the oil price”.

“We now expect that Brent crude oil prices will increase from an average of $81 per barrel in 1Q26 to a peak of $115 per barrel in 2Q26 before gradually falling to an average of $88 per barrel in 4Q26,” the EIA highlighted.

“We base this on the assumption that the conflict does not persist past April and that traffic through the Strait of Hormuz gradually resumes but does not return to pre-conflict levels until late 2026,” it added.

“Shut-in oil production gradually returns as flows through the strait resume and oil trade flows adjust. Given this relatively long adjustment period after flows through the strait resume, we expect oil prices will remain elevated, with Brent crude oil prices averaging $76 per barrel in 2027, about $23 per barrel higher than in our February STEO forecast,” it said.

The EIA noted in its latest STEO that disrupted crude oil production volumes in the Middle East have “increased significantly” since its last forecast in March.

“We assess that production shut-ins averaged 7.5 million barrels per day in March, and we expect they will increase to a peak of 9.1 million barrels per day in April before gradually falling over the coming months,” the EIA said.

“These disruptions imply a global inventory draw of 5.1 million barrels per day in 2Q26,” it added.

The EIA pointed out in its STEO that its forecast includes the U.S. Strategic Petroleum Reserve (SPR) release announced on March 11 and the collective release of strategic stocks announced by the International Energy Agency (IEA).

In its April STEO, the EIA said it has also revised its assumptions for global oil demand, “based on reports of government initiatives to reduce fuel use, fuel shortages, and the curtailing of refined oil product exports”.

“We assume reductions in demand occur primarily in Asia, which is more reliant on crude oil supplies from the Middle East,” the EIA stated.

“As a result, we now assume that global oil demand growth will average 0.6 million barrels per day in 2026, down from an average of 1.2 million barrels per day in last month’s STEO,” it added.

“We assume oil demand will rebound next year once supply flows return later in 2026, with oil demand growing by 1.6 million barrels per day in 2027 to 106.2 million barrels per day,” it continued.

To contact the author, email andreas.exarheas@rigzone.com