EIA Sees 2026 Oil Price Coming in $22 Higher Than Last Year

The U.S. Energy Information Administration (EIA) revealed in its latest short term energy outlook (STEO), which was released recently, that it sees the 2026 Brent spot price averaging $91.01 per barrel this year.

That’s $21.97 per barrel more than the 2025 Brent spot price average shown in the EIA’s September STEO, which stood at $69.04 per barrel. 

The EIA projected in the STEO that the Brent spot price will drop in 2027, averaging $73.74 per barrel for the year.

A quarterly breakdown included in the EIA’s latest STEO projected that the Brent spot price will come in at $89.11 per barrel in the third quarter, $90.66 per barrel in the fourth quarter, $84.90 per barrel in the first quarter of next year, $77.00 per barrel in the second quarter, $70.03 per barrel in the third quarter, and $63.94 per barrel in the fourth quarter.

In the first quarter of this year, the Brent spot price averaged $81.11 per barrel and in the second quarter the commodity came in at $102.93 per barrel, the STEO highlighted.

The EIA’s previous STEO, which was released in August, saw the Brent spot price averaging $86.81 per barrel this year and $69.39 per barrel next year.

A quarterly breakdown included in that STEO projected that the Brent spot price would come in at $85.21 per barrel in the third quarter, $78.00 per barrel in the fourth quarter, $73.95 per barrel in the first quarter of next year, $71.00 per barrel in the second quarter, $68.02 per barrel in the third quarter, and $64.97 per barrel in the fourth quarter.

“The Brent crude oil spot price increased to an average of $91 per barrel in August, $7 per barrel higher than in July,” the EIA highlighted in its latest STEO.

“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,” it added.

“This is due, in part, to the renewal of the U.S. blockade on Iran’s oil exports following Iran’s attacks on tankers in the Strait of Hormuz, as well as because of a new rounds of sanctions from the Treasury Department’s Office of Foreign Assets Control against Iranian economic and oil interests,” it continued.

The EIA noted in its September STEO that it expects these policies to restrict Iran’s oil exports and reduce its oil production.

“In addition, attacks on Saudi Arabia’s oil exports through the Bab el-Mandeb strait, a major world oil transit chokepoint, reduced oil exports departing from Saudi Arabia’s Yanbu port on the Red Sea, a route which bypasses the Strait of Hormuz,” the EIA highlighted.

“In August, exports out of Yanbu were down by about half from July, according to estimates from Vortexa. In response, Saudi Arabia has increased oil shipments through the Suez Canal at the north end of the Red Sea, a longer and costlier route for customers in Asia,” it added.

“Although Saudi Arabia has also reportedly begun to use a series of ship-to-ship transfers outside of the Persian Gulf, we expect that the constrained Red Sea shipping channel will limit Saudi Arabia’s supply in the near term until global shipping flows adjust,” the EIA said.

The EIA stated in its latest STEO that, “as flows through the Strait of Hormuz and the Bab el-Mandeb strait remain constrained and variable, crude oil production shut-ins rose over the past month”. It revealed in the STEO that it assesses that crude oil production shut-ins averaged 6.7 million barrels per day in August, which it revealed was up from 5.0 million barrels per day in July.

The EIA said in its STEO that it assumes that oil flows from the Middle East remain constrained through the fourth quarter of 2026, leading to shut-in production volumes averaging 5.7 million barrels per day during that quarter.

“Although we raised our forecast for production disruptions in coming months, we expect oil flows out of the Middle East will gradually increase as shippers continue to find workarounds that allow them to export oil from the Middle East,” the EIA said in its STEO.

“If these assumptions hold, we expect it will take until 2Q27 for most production and trade flows to return to pre-conflict averages,” it added.

“We anticipate, however, that some producers around the Persian Gulf will not be able to bring oil output back to pre-conflict averages during the forecast period,” it warned.

The EIA went on to reveal in its September STEO that, “because of the large drawdown in global inventories driven by continued disruptions of crude oil production”, it forecasts that oil prices will remain elevated until global oil flows return to normal and oil inventories can be replenished.

“We estimate that global oil inventories fell by an average of 3.9 million barrels per day in 2Q26 and that they will fall by an additional 3.0 million barrels per day on average in 3Q26 and 1.7 million barrels per day on average in 4Q26,” it said.

“As a result, we forecast the Brent crude oil spot price will average around $90 per barrel in the second half of 2026, $8 per barrel higher than in last month’s STEO,” it added.

The EIA predicted in its STEO that, “as exports from the Middle East gradually increase and shut-in oil production restarts”, oil prices will begin to fall, “decreasing to an average of $77 per barrel by 2Q27”.

“We assess that most shut-in oil production will be largely restored in 2H27 and that global oil inventories will again start building, gradually lowering oil prices to an average of $67 per barrel in 2H27, similar to last month’s STEO,” the EIA pointed out.

“However, we expect continued volatility in flows both through the Strait of Hormuz and through alternative routes based on changing conditions in the conflict, which will likely lead to more volatility in short-term price movements than our forecast indicates,” it warned.

New Normal

An analysis by the S&P Global Energy Crude Oil Markets team, which was sent to Rigzone on Thursday, noted that oil markets are “settling into a new normal”.

“With prospects for a definitive resolution to the Iran conflict dimmed and Brent crude prices recently topping $100 for the first time since July, crude oil markets are now settling into a prolonged new normal where disruption risk is persistent, not episodic,” the analysis stated.

The analysis warned that, for the first time since the U.S.-Iran war started, S&P Global Energy does not project Middle Eastern crude oil production to return to prewar levels by the end of 2027.

“The outlook does not assume a definitive end to the U.S.-Iran conflict, a normalization of Hormuz, or a disappearance of Red Sea disruption risk from Iran’s Houthi allies during that timeframe,” the analysis said.

“As a result, Middle Eastern crude oil and condensate exports are now expected to average roughly 10 million-16 million barrels per day on a monthly basis through 2027, compared with about 20 million barrels per day before the war in January-February 2026,” it added.

That export path means production will be lower than previously expected, the analysis warned.

“Middle Eastern crude oil and condensate production during the same period is now expected to average 21 million barrels per day, 4.2 million barrels per day lower than the previous outlook,” it said.

“Production capacity is not permanently lost, but security and logistical challenges limit how much oil can reach the market,” the analysis added.

The analysis revealed that S&P Global Energy now expects crude oil prices “broadly in an $80-$100 per barrel range” through 2027, and Dated Brent to average “around $90 or higher for the balance of 2026 and $86 next year”, which the analysis pointed out was $5 higher than the company’s previous outlook.

“Prices would likely be higher if not for the current lack of available refining capacity, which continues to put downward pressure on crude prices,” the analysis highlighted.

“The Russia-Ukraine war and the U.S.-Iran conflict have reduced refinery output because of damaged facilities or through difficulty moving products to market,” it said.

“China has also lowered its seaborne crude oil purchases and refinery runs. Collectively, these factors have reduced crude demand and helped moderate crude prices,” it added.

The analysis revealed that S&P Global Energy expects fourth quarter 2026 global crude oil demand to be 80.2 million barrels per day, which it pointed out is 4.7 million barrels per day less than a year ago.

“Gulf producers have strong incentives to find ways to move more oil to market, and they can be expected to adapt around political and security constraints as much as possible,” Jim Burkhard, Vice President and Global Head of Crude Oil Research at S&P Global Energy, said in the analysis.

“However, the market is not returning to calm, it is adjusting to the new normal defined by unresolved conflict and persistent maritime risk - one where oil flows stay below prewar levels and the path forward remains uneven,” Burkhard added.

“Crude oil demand is constrained not because consumers have disappeared, but because of limited available refinery capacity,” he continued.

“Lower Middle Eastern production supports prices, while refining constraints and relatively low levels of Chinese crude oil imports limit crude demand,” he noted. 

Burkhard went on to highlight in the analysis that “crude markets remain caught between constrained supply and limited available refining capacity”.

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