The U.S. Energy Information Administration (EIA) increased its Brent spot price forecast for 2026 and 2027 in its latest short term energy outlook (STEO), which was released on March 10.
In this STEO, the EIA projected that the Brent spot price will average $78.84 per barrel this year and $64.67 per barrel next year. The EIA projected in its previous STEO, which was released in February, that the Brent spot price would average $57.69 per barrel in 2026 and $53.00 per barrel in 2027. Both STEOs highlight that the Brent spot price averaged $69.04 per barrel in 2025.
A quarterly breakdown included in the EIA’s latest STEO showed that the EIA expects the Brent spot price to come in at $79.62 per barrel in the first quarter of this year, $90.56 per barrel in the second quarter, $75.45 per barrel in the third quarter, $70.00 per barrel in the fourth quarter, $66.00 per barrel in the first quarter of next year, $65.00 per barrel in the second quarter, $64.00 per barrel in the third quarter, and $63.00 per barrel in the fourth quarter.
In its previous STEO, the EIA projected that the Brent spot price would average at $64.44 per barrel in the first quarter of 2026, $57.32 per barrel in the second quarter, $55.35 per barrel in the third quarter, $54.00 per barrel in the fourth quarter, and $53.00 per barrel across all four quarters of 2027.
“The Brent crude oil spot price rose from an average of $71 per barrel on February 27 to $104 per barrel on March 9 following the onset of military action in the Middle East that began on February 28,” the EIA stated in its March STEO.
“As of March 9, when we finalized our forecast, physical damage to oil infrastructure was limited, but the Strait of Hormuz was effectively closed to most shipping traffic,” it added.
The EIA warned in its STEO that “high uncertainty about the conflict’s effect on oil supplies has added a large risk premium to oil prices as market participants assess actual disruptions to oil flows and weigh the potential for those disruptions to persist”.
The primary risk that would cause oil prices to continue rising is an extended closure of the Strait of Hormuz, the EIA said, noting that this route is a major world oil transit chokepoint through which nearly 20 percent of global oil supply flows.
“Although the Strait of Hormuz is not physically blocked, the threat of attack by Iran and the cancellation of insurance coverage have led most tankers to avoid transiting the Strait,” the EIA noted in its STEO.
“As a result, some oil production in the region has been shut in. If this reduction in vessel volume persists, oil storage behind the chokepoint will quickly fill, causing oil producers to shut in even more production, lending further support to oil prices,” it added.
In its March STEO, the EIA highlighted that running its model requires making a number of assumptions about an environment that is evolving and uncertain.
“In this analysis, we make the assumption that shut-in oil production will peak in early April, mostly in Iraq with smaller volumes in Kuwait, the United Arab Emirates, and Saudi Arabia,” it pointed out.
“We make the further assumption that shut-in production will gradually ease as transit through the Strait resumes. We expect some near-term disruptions of oil flows and related production shut-ins, along with a persistent risk premium, will keep Brent prices at an average of $91 per barrel in the second quarter of 2026,” it added.
“Once oil flows are reestablished through the Strait of Hormuz, we expect global oil production will continue to outpace consumption over our forecast period, resulting in global oil inventories increasing by an average of 1.9 million barrels per day in 2026 and by 3.0 million barrels per day in 2027,” it continued.
The EIA warned that growing oil inventories will again begin to weigh on oil prices and highlighted that it expects the Brent price will fall to an average of $70 per barrel in the fourth quarter of 2026 and to $64 per barrel in 2027.
In its March STEO, the EIA also pointed out that, on March 1, OPEC+ agreed to begin increasing production in April 2026 by a total of 206,000 barrels per day.
“Although OPEC+ will not announce its planned 2027 targets until 4Q26, we do not expect OPEC+ will significantly increase production next year given estimates of significant inventory builds over the forecast period,” the EIA projected.
“Our current assumption around OPEC+ supply also is contingent on the duration and extent of disruption to oil flows around the Strait of Hormuz,” it added.
The escalating war between the U.S., Israel, and Iran is creating the most severe disruption to global energy markets since the 1970s, GlobalData said in a statement sent to Rigzone on Wednesday.
To contact the author, email andreas.exarheas@rigzone.com
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