EIA Raises Oil-Price Forecasts as War in Middle East Continues

By Anthony Harrup

The Energy Information Administration raised its forecasts for crude oil prices in 2026 as the prolonged closure of the Strait of Hormuz shuts in production in the Middle East and wipes out its expected global inventory builds.

In its latest Short Term Energy Outlook, the EIA raised its 2026 forecast for Brent crude to $96 a barrel from $79 a barrel previously. It now expects U.S. benchmark West Texas Intermediate crude to average $87 a barrel, up from $74 a barrel in the March outlook.

The EIA estimates that Iraq, Saudi Arabia, Kuwait, the United Arab Emirates, Qatar and Bahrain collectively shut in 7.5 million barrels a day of crude oil production in March, and expects that to rise to 9.1 million barrels a day in April.

"We assume the conflict does not persist past April and that traffic through the Strait of Hormuz gradually resumes," the agency said Tuesday, adding that shut-ins are expected to fall to 6.7 million barrels a day in May and return to near prewar levels in late 2026.

The EIA now expects global oil inventories to draw down by 300,000 barrels a day on average this year, compared with its previous expectation of a 1.9 million barrels a day increase. It also cut its 2026 oil-demand-growth forecast by half, to 600,000 barrels a day, with a rebound to 1.6 million barrels a day in 2027.

The agency sees Brent peaking at an average $115 a barrel in the second quarter, falling below $90 in the fourth quarter, and averaging $76 a barrel in 2027. The forecast depends greatly on the duration of the conflict and resulting production outages, the EIA said.

On the domestic side, the EIA expects average U.S. gasoline prices at the pump to peak around $4.30 a gallon in April, and average more than $3.70 in all of 2026. Diesel prices are seen above $5.80 a gallon in April and $4.80 a gallon in 2026.

Write to Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

April 07, 2026 13:26 ET (17:26 GMT)