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Informist, Thursday, Sept. 10, 2026

 

MUMBAI – The US Energy Information Administration expects Brent crude oil price to average around $90 per barrel in the second half of 2026, up from $85 per barrel predicted for Jul-Sep in its August outlook. With the likelihood of a rise in oil production into next year and a rebuilding of inventories, the agency expects Brent spot prices to gradually fall to an average of $74 per barrel in 2027.

 

The Brent crude oil spot price averaged $91 per barrel in August, up $7 per barrel from July, the agency said. Prices rose as total exports out of West Asia remained constrained, leading to more oil production shut-ins in the region. This is in part due to the renewal of the US blockade on Iran's oil exports and the new round of US sanctions against Iranian economic and oil interests.

 

Additionally, attacks on Saudi Arabia's oil exports through the Bab el-Mandeb Strait reduced oil exports departing from Saudi Arabia's Yanbu port on the Red Sea, a route which bypasses the Strait of Hormuz. To make up for the reduction, Saudi Arabia has increased oil shipments through the Suez Canal, a longer and costlier route for customers in Asia. "Although Saudi Arabia has also reportedly begun to use a series of ship-to-ship transfers outside the Persian Gulf, we expect that the constrained Red Sea shipping channel will limit Saudi Arabia's supply in the near term until global shipping flows adjust," the agency said.

 

Crude oil production shut-ins likely averaged 6.7 million barrels per day in August, up from 5.0 million barrels per day in July, the agency said. EIA assumes oil flows from West Asia will remain constrained through Oct-Dec, leading to shut-in production volumes averaging 5.7 million barrels per day during the quarter. 

 

The agency estimates global oil inventories to have declined by an average of 3.9 million barrels per day in the Apr-Jun quarter of 2026. Inventories are likely to fall by an additional 3 million barrels per day on average in Jul-Sept, and by 1.7 million barrels per day in Oct-Dec. 

 

Although EIA has raised its forecast for production disruptions in the coming months, oil flows out of West Asia are expected to gradually increase as shippers continue to find alternative ways to export oil. These workarounds are likely to be functional by mid-2027. If these assumptions hold, it will take until the second quarter of 2027 for most production and trade flows to return to pre-war averages. 

 

As exports from West Asia gradually increase and shut-in oil production restarts, the agency forecasts a fall in oil prices, decreasing to an average of $77 per barrel by the second quarter of 2027. Most shut-in oil production will largely be restored in the second half of 2027. Global oil inventories will start building, gradually lowering oil prices to an average of $67 per barrel in the second half of 2027, the agency said.

 

However, continued volatility in flows through both the Strait of Hormuz and alternative routes is likely, given changing conditions in the war in West Asia. This is likely to lead to more fluctuations in short-term price movements than the agency's forecasts indicate, it said.  End

 

US$1 = INR 95.11

 

Reported by Shreya Shetty

Edited by Saji George Titus

 

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