EIA raises 2026 oil price forecast to $96 amid Strait of Hormuz disruption

The US Energy Information Administration (EIA) raised its average oil price forecast for 2026 on Tuesday, saying that disruptions in the Strait of Hormuz, which was effectively closed following US and Israeli strikes on Iran, have adversely affected global energy supply. In the agency's Short-Term Energy Outlook (STEO), the EIA raised its average Brent crude price forecast to $96 per barrel, up from $78.84, while West Texas Intermediate (WTI) crude was revised to $87.41 per barrel from $73.61.

Price surge

The EIA said that Brent crude spot prices averaged $103 per barrel in March, up $32 from February, with daily prices climbing to nearly $128 on April 2. Global oil markets are being driven by heightened volatility following the effective closure of the Strait of Hormuz, a critical chokepoint through which around 20% of global oil supply flows.

Production shut-ins

Disruptions are expected to persist through the end of 2026, keeping upward pressure on prices. Middle East supply disruptions have intensified, with outages estimated at 7.5 million barrels per day (bpd) in March, rising to a peak of 9.1 million bpd in April before easing. The disruptions are projected to drive a global inventory draw of around 5.1 million bpd in the second quarter of 2026.

Demand and supply

Global oil demand expectations have been revised lower amid government-led efforts to curb fuel consumption, supply shortages and restrictions on refined product exports. Demand weakness is expected to be most pronounced in Asia, which remains more reliant on Middle Eastern crude. The EIA forecasts US crude oil production to average 13.51 million bpd in 2026, rising to 13.95 million bpd in 2027.

Ceasefire impact

President Trump announced a two-week ceasefire with Iran on Tuesday, contingent on Tehran reopening the Strait of Hormuz. The EIA's forecast assumes that even if flows resume, lingering disruptions to tanker traffic and trade routes are likely to take time to resolve, with the risk of renewed outages expected to keep prices elevated.