EIA raises forecasts for Brent crude and refined oil prices: Brent crude average price for 2026 raised by 6.1%, gasoline by 5.9%, diesel by 8.5%

The latest Short-Term Energy Outlook (STEO) from the U.S. Energy Information Administration (EIA) shows that due to the continued significant restrictions on crude oil shipments through the Strait of Hormuz, the degree of global oil supply disruption is higher than previously expected, prompting the EIA to raise its future oil price forecasts.

The EIA expects the average spot price of Brent crude oil in 2026 to be $87 per barrel, up from the previous forecast of $82 per barrel; the average price for the third quarter of 2026 is expected to be around $85 per barrel, with oil prices likely to remain roughly at the level of the first week of August in the coming months.

The EIA stated that its latest forecast assumes that the severe shipping restrictions in the Strait of Hormuz will last until August. As a result, the amount of oil transported through the Strait in the coming months will decrease further, causing the global decline in crude inventories to be larger than previously expected, which will keep oil prices at relatively high levels.

It is expected that as Middle East capacity gradually recovers at the beginning of 2027, the increase in supply will push oil prices down again. The average price in 2027 is expected to be $69 per barrel, previously $65 per barrel.

On Tuesday, Brent crude oil futures rose 1.2% to $88.8 per barrel.

Refined Oil Price Forecasts Raised in Tandem

The expectation of rising oil prices has also spread to the U.S. refined oil market.

The EIA raised its forecast for the 2026 U.S. wholesale diesel price from $3.10 per gallon to $3.37 per gallon, an increase of 8.5%; the forecast for 2027 was raised from $2.47 to $2.62, an increase of 6.3%.

As for gasoline, the EIA raised its forecast for the 2026 U.S. wholesale gasoline price from $2.75 per gallon to $2.91, an increase of 5.9%; the 2027 forecast was raised from $2.13 to $2.32, an increase of 9.0%.

U.S. Crude Oil Inventories May Remain Low

In terms of inventories, the EIA expects that U.S. commercial crude oil inventories will remain below the five-year low from 2021 to 2025 through the end of 2026.

The EIA sharply lowered its forecast for U.S. crude oil inventories at the end of 2026 from 433 million barrels to 396 million barrels, a drop of 8.6%. The inventory forecast for 2027 remains unchanged at 432 million barrels.

The EIA pointed out that since mid-April, increased U.S. crude exports, reduced imports, and a high refinery operating rate have led to consecutive weekly declines in U.S. crude inventories. Due to strong international demand for U.S. crude, the net import volume is expected to remain below historical averages through 2027.

Oil Prices Expected to Fall After Middle East Capacity Recovers in 2027

Although short-term supply risks remain high, the EIA expects oil prices to return to a downward trajectory in 2027.

The EIA forecasts that most Middle Eastern crude production will recover to near pre-conflict average levels at the start of 2027. However, some supply interruptions are expected to persist through the end of 2027, at a scale of about 600,000 barrels per day.

As most capacity recovers, the resulting increase in global crude supply will drive a rebuild in inventories and Brent oil prices are expected to decline gradually, with the annual average for 2027 falling back to $69 per barrel.

U.S. Natural Gas Price Forecast Significantly Lowered

Compared to crude oil, the EIA has significantly lowered its forecast for U.S. natural gas prices.

The EIA expects the average spot price of Henry Hub natural gas in the third quarter of 2026 to be $2.87 per MMBtu, 50 cents lower than the July forecast.

The EIA stated that ongoing maintenance at Freeport LNG has reduced LNG export terminal demand for feedstock gas, while U.S. natural gas production remains strong, pushing prices lower.

By October, U.S. natural gas inventories are expected to reach near historical highs, so Henry Hub prices are expected to remain below $3/MMBtu in the coming months.

For U.S. LNG exports, the EIA expects the average export volume in the third quarter of 2026 to be 16.5 billion cubic feet per day, slightly lower than last month's forecast.

Meanwhile, the launch of Mexico's Energia Costa Azul LNG project and growing U.S. gas-fired power generation demand will continue to drive growth in U.S. natural gas pipeline exports through 2027.

Data Center Demand Continues to Push Up Electricity Consumption

The EIA has also lowered its forecast for Texas electricity demand.

As data center construction continues to drive up U.S. electricity demand, U.S. power generation will keep rising in 2026. However, after the Texas governor announced a moratorium on new data center development on August 3, the EIA lowered its forecast for local electricity demand.

The EIA now expects Texas electricity load to grow by 6% in 2027, significantly lower than the previous forecast of 14%.

In terms of generation mix, solar power and new natural gas power projects remain the main drivers of U.S. power generation growth in 2026. In the first half of the year, U.S. solar, hydro, and wind power generation increased by 21%, 9%, and 6%, respectively, compared to the same period in 2025.

The EIA expects continued growth in renewable energy capacity will support this growth trend through 2027; at the same time, relatively low natural gas prices will drive further increases in natural gas power generation, while coal-fired generation will continue to fall due to lower gas costs.

U.S. Coal Export Forecast Revised Upward

For coal, U.S. coal exports rose sharply in April and May, prompting the EIA to raise its forecast for U.S. coal exports in 2026 to 102 million short tons.

In particular, metallurgical coal exports continued to grow in the first half of 2026, mainly supported by new mines and reopening of previously idled mines; after falling in the first quarter, thermal coal exports rebounded in the second quarter.

The EIA stated that changes in global markets such as gas-to-coal switching in Europe and Asia have improved market conditions for U.S. coal exporters.