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Informist, Wednesday, Aug. 12, 2026

MUMBAI – Brent crude oil prices are estimated to average around $85 per barrel in the third quarter of 2026, up by $11 per barrel from July's outlook, the US Energy Information Administration said in its Short-Term Energy Outlook monthly report, August edition. As inventories rebuild, with most production expected to recover by early 2027, the Brent spot price is expected to gradually fall to an average of $69 per barrel in 2027, the administration said.

Global oil inventories are likely to have declined by an average of 4.2 million barrels per day in the second quarter of 2026, the energy body said. Inventories are expected to fall further by an average of 3.8 million barrels per day in the third quarter of the year, pushing Brent crude oil spot price to $85 per barrel. Once traffic through the Strait of Hormuz steadily increases and shut-in oil production increasingly restarts, the administration expects prices to fall to an average of $78 per barrel by the fourth quarter of 2026. Most shut-in oil production is expected to be largely restored by the first quarter of 2027, and global oil inventories will start building again, gradually lowering prices to an average of $69 per barrel. 

Global crude oil prices rose and volatility increased later in July following renewed attacks on tankers transiting the Strait of Hormuz and the related reduction in oil shipments through the waterway, the administration said. Crude oil prices were also driven higher due to a new blockade threat on Saudi Arabia's oil exports through the Bab el-Mandeb Strait. The Bab el-Mandeb is both a major world oil transit choke point and one of the alternative routes used to move Saudi Arabia's oil shipments while avoiding the Strait of Hormuz. 

Crude oil production shut-ins are estimated to have averaged 5.5 million barrels per day in July, the administration said. The administration assumes oil shipments through the Strait of Hormuz are likely to remain severely constrained through August, with flows gradually increasing in September. With this assumption, the energy body has raised its forecast of shut-in production in August, further reducing inventories. The assumption does not factor in the recent threats to ships transporting crude oil from Saudi Arabia through the Bab el-Mandeb Strait. 

If this assumption holds, the administration expects crude oil production and trade patterns to return to pre-West Asia war status by early 2027. However, it is likely some producers around the Persian Gulf will not be able to bring oil output back to pre-conflict averages in the same period, the administration said. "We expect ongoing disruptions of about 0.6 million barrels per day to continue through the end of next year," it said.  End

US$1 = INR 95.42

Reported by Shreya Shetty

Edited by Himanshi Gupta

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