EIA increases global oil production forecast after the opening of the Strait of Hormuz

Shipping traffic through the Strait of Hormuz has increased following the 18 June memorandum of understanding (MoU) between the US and Iran to end a months-long conflict and reopen the strait. EIA now expects worldwide crude oil production and trade flows to rebound to near pre-conflict levels by year’s end, with most previously shut in production returning online by 1Q27. EIA forecasts that more oil production globally will lower crude oil and gasoline prices, with the US average retail gasoline prices averaging about US$3.60/gal. in 2H26, down from US$4.48/gal. in May.

Global oil markets

Following the June 18 MoU between the US and Iran to end the conflict and increased traffic through the Strait of Hormuz, EIA increased its forecast for global oil production and now expects crude oil output and trade flows to return to near pre-conflict levels by year end, with most shut in production restored by early 2027.

Crude oil price forecast

Rising global oil supply and slowing inventory withdrawals have pushed oil prices lower. The Brent crude oil spot price averaged US$85/bbl in June, down US$22/bbl from May and US$32/bbl from the April 2026 peak. EIA forecasts Brent crude oil prices to average US$74/bbl in 3Q26, US$27/bbl lower than last month’s forecast. EIA expects continued oil inventory builds over the next year will push crude oil prices lower, with Brent falling to an average of US$65/bbl in 2027.

US gasoline prices

Lower crude oil prices will contribute to a drop in US retail gasoline prices, with EIA’s forecast showing 3Q26 averages declining to US$3.80/gal. from US$4.21/gal. in 2Q26. Although tight gasoline inventories keep refiners’ margins elevated in the near term, EIA expect rebuilding stocks and the end of the summer demand season to narrow those margins and push prices even lower to about US$3.40/gal. in 4Q26, with the annual average falling below US$3.10/gal. in 2027.

Natural gas prices

Record US natural gas production will help meet rising demand and push prices lower, with Henry Hub spot prices averaging close to US$3.70 per million Btu in 2026 before easing below US$3.50 million Btu in 2027.

Read the article online at: https://www.hydrocarbonengineering.com/refining/09072026/eia-increases-global-oil-production-forecast-after-the-opening-of-the-strait-of-hormuz/