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Informist, Wednesday, Oct. 7, 2026

MUMBAI – Brent crude oil prices are forecast to average at $105 per barrel in the fourth quarter of 2026, higher by $14 per barrel estimated for Jul-Dec in September's outlook, the US Energy Information Administration said in its Short-Term Energy Outlook monthly report, October edition. A combination of workarounds to export oil from West Asia--such as pipeline and overland bypass routes, ship-to-ship transfers, and new bypass pipeline capacity expected to come online in 2027 in the United Arab Emirates--will help shut-in volumes to gradually fall. As such, Brent spot price will fall to an average of $84 per barrel in 2027.

Brent crude oil spot price increased to an average of $114 per barrel in September, up by $23 per barrel from August. Prices rose notably due to attacks on Saudi Arabia's East-West oil pipeline, which temporarily halted flows on a crucial bypass used to circumvent the Strait of Hormuz. Before the attacks, the agency estimates this pipeline was shipping more than 5 million barrels per day of oil via Saudi Arabia's Yanbu port on the Red Sea. The disruption of the pipeline led to the daily Brent spot price reaching as high as $131 per barrel on Sept. 15. Prices eased somewhat during the last week of September as the East-West pipeline was repaired and partially resumed flows as of Sept. 22.

Oil exports from West Asia are expected to have increased in September from August despite the increase in attacks, leading to a fall in production shut-ins, the agency said. Crude oil production shut-ins likely averaged 4.8 million barrels per day in September, down from 5.8 million barrels per day in August, and down significantly from 10.9 million barrels per day in May. 

However, oil flows from West Asia are likely to remain constrained through the fourth quarter of 2026, leading to shut-in production averaging 4.5 million barrels per day during the quarter, the agency said. With export routes still constrained, the attacks on Saudi Arabia's East-West pipeline highlight the potential for continued volatility in physical oil flows and oil prices amid ongoing withdrawals from oil inventories, it said. The agency estimates that global oil inventories fell by an average of 1.9 million barrels per day in the third quarter of 2026, and that they will fall an additional 700,000 barrels per day on average in Oct-Dec. 

The additional upward pressure on crude oil prices during the fourth quarter of 2026 also stems from extreme tightness in diesel markets that raises demand for crude oil in order for refiners to meet diesel demand, the agency said.

Although the agency raised the crude oil price forecast from last month, it expects oil prices to generally fall from their early October average. The majority of production in West Asia is likely to return to pre-war averages by the end of the second quarter of 2027, during which Brent spot prices are expected to decrease to an average of $87 per barrel, the agency said. As depleted global oil inventories build throughout next year, oil prices are expected to gradually fall to an average of $74 per barrel in the fourth quarter of 2027, it said.

However, the agency expects the war in West Asia to lead to continued volatility in crude oil flows both through the Strait of Hormuz and through alternative routes, which will likely lead to more volatility in short-term price movements than what its forecast indicates.  End

US$1 = INR 96.42

Reported by Shreya Shetty

Edited by Akul Nishant Akhoury

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