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EIA Raises Global Oil Output Forecast After Reopening of Strait of Hormuz
Summary
The U.S. Energy Information Administration has increased its forecast for global oil production following a recent agreement that reopened the Strait of Hormuz. The agency now projects lower prices for crude oil and U.S. gasoline through 2027.
The U.S. Energy Information Administration (EIA) on Tuesday raised its forecast for global oil production, citing the reopening of the Strait of Hormuz after a June 18 agreement between the United States and Iran. The agency now anticipates that worldwide crude oil production and trade will recover to levels seen before the recent conflict by the end of 2026.
According to the EIA's report, most of the previously shut-in oil production is expected to come back online by the first quarter of 2027. This revised outlook has led to a significant adjustment in price forecasts.
The Brent crude oil spot price, which averaged $85 per barrel in June, is now projected to average $74 per barrel in the third quarter of 2026. This is a $27 per barrel reduction from last month's forecast. The agency expects prices to continue to decline, averaging $65 per barrel in 2027 as global oil inventories build.
AdFor consumers in the United States, the EIA forecasts a drop in retail gasoline prices. The average price is expected to fall from $4.21 per gallon in the second quarter to $3.80 per gallon in the third quarter of 2026. The agency projects prices will decrease further to approximately $3.40 per gallon in the fourth quarter, with the annual average for 2027 falling below $3.10 per gallon.
The report also included projections for natural gas, with the EIA forecasting that Henry Hub spot prices will average close to $3.70 per million British thermal units (MMBtu) in 2026, before easing to below $3.50 per MMBtu in 2027.