The U.S. Energy Information Administration sharply revised its oil price outlook in its latest Short-Term Energy Outlook (STEO) based on the growing impact of the Middle East conflict and the near standstill in tanker traffic through the Strait of Hormuz.
Brent crude settled at $94 per barrel on March 9, according to the EIA— a roughly 50% surge since the start of the year and the highest level since September 2023. Prices have climbed rapidly as shipments through the Strait of Hormuz slowed dramatically and some Middle East producers began shutting in output due to the inability to move barrels to market.
The EIA’s latest forecast assumes that the effective closure of the Strait will continue to constrain production in the region in the coming weeks, though the agency expects some of those outages to ease as shipping activity gradually resumes.
Despite the current surge, the agency still expects prices to fall later in the year if supply flows normalize. The EIA now forecasts Brent crude to average $79 per barrel in 2026—a sharp increase from its previous forecast of $58 per barrel issued just one month ago. By 2027, Brent is projected to average $64 per barrel, also significantly higher than the earlier $53 forecast.
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The revisions highlight how quickly global oil balances have shifted since military action against Iran disrupted one of the world’s most important energy chokepoints.
Higher prices are also expected to translate into increased U.S. oil production. The EIA now forecasts U.S. crude output will average 13.6 million barrels per day in 2026 before rising to 13.8 million barrels per day in 2027, about half a million barrels per day higher than last month’s forecast for that year.
For now, however, the outlook remains highly dependent on geopolitical developments. The EIA emphasized that its price trajectory assumes the Middle East conflict proves temporary and that tanker traffic through the Strait of Hormuz gradually resumes.
If disruptions persist longer than expected, the agency warned, both oil prices and supply balances could shift far more dramatically than the current forecast assumes.
By Julianne Geiger for Oilprice.com