The U.S. Energy Information Administration raised its Brent crude price forecasts for 2026 and 2027, pointing to falling global stockpiles and tight diesel markets tied to the Iran war's disruption of the Strait of Hormuz. The same day, the agency's winter fuels outlook found natural gas and propane users will pay less this winter, while heating oil users face bills about 21% higher than last year.
The EIA raised its oil price forecast Tuesday, citing rapidly falling global stockpiles and tight diesel markets amid the ongoing Iran war.
Brent forecast jumps on Hormuz disruption
Global benchmark Brent crude is now expected to average about $98 a barrel in 2026, up 8% from the EIA's previous forecast, the agency said in its Short-Term Energy Outlook.
Oil and fuel prices have risen sharply because of the US-Israeli war on Iran, which has disrupted flows through the Strait of Hormuz, a passage that carried about 20% of global oil supplies before the war. Iran has also struck regional energy infrastructure in response to US military strikes.
Falling inventories and tightening diesel supplies are expected to keep crude elevated, with Brent forecast to average about $105 a barrel in the fourth quarter, $14 above the EIA's previous estimate. US retail diesel prices, which hit record highs last month, are expected to stay above $6 a gallon in October before easing to roughly $4.50 a gallon in 2027.
Gulf flows begin to recover
Middle East oil production and exports are expected to gradually recover as transit through the strait improves, and as flows rebuild, Brent is expected to average $84 a barrel in 2027, $10 above the agency's prior forecast. Saudi Arabia has restarted shipments through its East-West Pipeline to the Red Sea, bypassing the strait, while other regional exporters have adapted by using so-called dark transits — tankers that disable tracking systems before transferring cargoes at sea.
Those measures have helped restore Gulf oil flows, excluding Iran, to more than 81% of pre-war levels in September. As the workarounds expand, crude production shut-ins are expected to fall from 4.5 million barrels per day in the fourth quarter of 2026 to 2.7 million bpd in the first quarter of 2027, the agency said.
Heating oil users face steeper winter bills
The EIA's winter fuels outlook, published the same day, found a mixed picture for households. Homes that primarily heat with natural gas or propane — about half of U.S. households — will spend less on energy this winter than last.
But households that use heating oil, about 3% of U.S. homes mostly in the Northeast, are expected to pay about 21% more than last winter. The agency is forecasting a 30% increase in heating oil prices, an increase it expects milder Northeast weather to partly offset.
EIA Administrator Tristan Abbey said: "households that rely on heating oil face higher prices because distillate markets remain tight". US East Coast distillate stockpiles were 32% below their five-year seasonal average in September and are forecast to stay 20% to 30% below average through winter.
Natural gas inventories, by contrast, are set to enter the winter 2% above their five-year average, a cushion the EIA expects to limit further price increases.
Sources: Commodities & Futures News, Commodities & Futures News
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