EIA Lifts 2026 Oil Price Forecasts as Middle East Conflict Drains Global Inventories

The U.S. Energy Information Administration (EIA) on Wednesday raised its price forecasts for both this year and next, projecting higher costs for crude oil as the ongoing conflict in the Middle East severely curtails supply and drains global inventories.

Inventory Drawdown Fuels Price Hike

In its latest Short-Term Energy Outlook, the agency reported that global oil inventories have plummeted by approximately 400 million barrels so far this year. The EIA anticipates further declines through the end of 2026 as a significant volume of Middle Eastern production and exports remain offline.

Reflecting these tighter market conditions, the EIA now forecasts:

• Global benchmark Brent crude will average about $91 a barrel in the spot market this year, a nearly 5% increase from its previous forecast.
• U.S. West Texas Intermediate (WTI) crude is expected to average $84.65 a barrel, also a hike of almost 5%.

Middle East Production Stalls

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The supply disruptions are substantial, with Middle East oil output shut-ins climbing to 6.7 million barrels per day (bpd) in August, up from 5 million bpd in July, the EIA said. The agency attributed the increase to attacks on Saudi Arabian export routes, which have impacted shipments from the key Yanbu port on the Red Sea.

The EIA projects these shut-ins will average about 5.7 million bpd during the fourth quarter. It does not expect regional output and exports to return to pre-conflict levels until the second quarter of next year.

Market Context and Outlook

It is important for investors to note that the EIA's report was finalized on September 3, before the most recent escalation in hostilities. Since the report's data cutoff, renewed attacks on shipping and energy infrastructure have pushed Brent crude prices above $100 a barrel.

While the agency expects oil flows to gradually increase through workarounds like ship-to-ship transfers, it cautioned that any recovery in supply remains highly dependent on developments in the conflict.