The US Energy Information Administration (EIA) raised its 2026 and 2027 oil price forecasts, citing rapidly declining global inventories, tight diesel markets, and continued disruptions to Middle East oil flows amid the ongoing Iran war, Reuters said.
The EIA expects Brent crude to average around $105 per barrel in the fourth quarter (Q4) of 2026, $14 higher than its previous estimate, as attacks on Saudi Arabia’s East-West Pipeline highlight the risk of further disruptions to global oil supplies.
Meanwhile, tight diesel availability is encouraging refiners to maximize diesel output, increasing crude demand and putting additional upward pressure on oil prices. US retail diesel prices, which reached record highs last month, are expected to remain above $6 per gallon in October before easing to an average of about $4.50 per gallon in 2027.
For full-year 2026, the EIA now expects Brent to average about $98/bbl, 8% up its previous forecast.
The agency attributed the sharp rise in oil and fuel prices to the US-Israeli war on Iran, which has disrupted shipments through the Strait of Hormuz, a route that carried about 20% of global oil supplies before the conflict began on February 28.
Although Middle East oil flows are expected to remain constrained through Q4, the EIA said regional shut-in production in September was at its lowest level since the start of hostilities.
Oil production and exports are expected to gradually recover as Strait of Hormuz transit improves, and producers use alternative export routes and ship-to-ship transfers. As inventories rebuild, Brent is forecast to average $84/bbl in 2027, $10 higher than the EIA’s previous estimate.
Saudi Arabia has resumed shipments through its East-West Pipeline following Houthi attacks, while regional exporters have also used “dark transits,” in which tankers disable tracking systems before transferring cargoes at sea. These measures helped Gulf oil flows, excluding Iran, recover to more than 81% of pre-war levels in September.
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