Oil prices to remain elevated in 2026 – EIA
The US Energy Information Administration (EIA) expects the Brent crude spot price to average $96/bbl in 2026, before declining to around $76/bbl the following year.
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The EIA expects Brent crude’s price to remain near $100/bbl this year due to the ongoing conflict in the Middle East that has roiled global markets, with vessel traffic through the Strait of Hormuz declining sharply.
The front-month Brent futures contract opened the year at $61/bbl, while it finished the first quarter at $118/bbl, according to the EIA. The price increase during the January – March 2026 period “was the largest on an inflation-adjusted basis in data going back to 1988,” according to the agency.
The EIA now expects Brent crude’s price to increase from an average of $81/bbl in the first quarter of 2026, to a peak of $115/bbl in the second quarter, before falling to an average of $88/bbl in the fourth quarter of this year.
“We maintain a risk premium on crude oil prices throughout the forecast period as we expect uncertainty around future supply disruptions to keep prices above pre-conflict levels,” the EIA said.
The energy agency has clarified that the price forecast is “highly dependent” on its assumptions of the duration of the US-Irael conflict with Iran and resulting outages in oil production.
“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,” the energy agency said in its April short-term energy outlook (STEO) report.
Supply and demand estimates
Global liquid fuels production is expected to reach 104.3 million b/d in 2026 – about 2.7 million b/d lower than the EIA’s previous estimate.
The decline in annual production estimates come as supply outages due to the Middle East war averaged 7.5 million b/d last month. Production shut-ins are expected to increase to a peak of 9.1 million b/d in April.
“These disruptions imply a global inventory draw of 5.1 million b/d in 2Q26 [second quarter of 2026],” according to the EIA.
In 2027, total liquid fuels production is projected to touch 109.5 million b/d – about 100,000 b/d lower than its March estimates.
“Once oil flows are reestablished through the Strait of Hormuz, we expect global oil production will continue to outpace consumption over our forecast period,” the EIA said.
OPEC liquid fuels production is expected to average around 31.4 million b/d this year – 2 million b/d lower than the EIA’s previous projection. The Saudi Arabia-led coalition is expected to increase production to 34.6 million b/d in 2027, the US-based agency said.
The US energy agency forecasts global oil demand to average 104.6 million b/d in 2026 – about 600,000 b/d lower than its previous forecast.
“We have also revised our 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,” the energy agency said.
The decline in oil demand will primarily occur in Asia as it is more reliant on crude supplies from the war-torn Middle East region, the EIA said.
Oil demand growth is expected to rebound in 2027 – averaging around 106.2 million b/d, as oil flows are expected to resume in the latter half of this year.
By Aparupa Mazumder
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