EIA’s oil price cut overtaken by new U.S.-Iran strikes

Published 1 hour ago 30 sources

The U.S. Energy Information Administration on Monday sharply cut its crude oil price forecast following last month’s U.S.-Iran agreement to reopen the Strait of Hormuz, projecting Brent crude to average $74 per barrel in the third quarter of 2026 — $27 per barrel below its June outlook. But the forecast was published just hours before a dramatic collapse in the ceasefire threw global energy markets back into uncertainty.

The July Short-Term Energy Outlook, released July 7, reflected the EIA’s expectation that the June 18 memorandum of understanding between Washington and Tehran would allow most of the shut-in Middle East oil production — which peaked at 11.2 million barrels per day in May — to return to near pre-conflict levels by year-end, with full restoration in the first quarter of 2027. eia.gov eia.gov

EIA's oil price cut overtaken by new U.S.-Iran strikes

A Forecast Overtaken by Events

The EIA projected Brent crude would decline further to $65 per barrel in 2027 as global inventories rebuild, with oil stocks expected to grow by 2.7 million barrels per day in the fourth quarter of 2026 and 5.0 million barrels per day in 2027. U.S. crude oil production was forecast at 13.8 million barrels per day in 2026 and 14.0 million in 2027, while U.S. LNG exports were projected to rise from 15 billion cubic feet per day in 2025 to 17 billion in 2026 and 19 billion by 2027. advisorperspectives.com eia.gov

Yet on the same day the outlook was published, President Donald Trump declared the ceasefire with Iran “over” after Tehran attacked commercial ships in the Strait of Hormuz. The U.S. launched strikes on more than 80 targets in Iran overnight Tuesday into Wednesday, with Iran retaliating against U.S. bases in Bahrain and Kuwait. The Treasury Department reimposed sanctions on Iranian oil sales effective July 7. aljazeera.com euronews.com

Gasoline Relief May Be Short-Lived

The EIA forecast that U.S. retail gasoline prices would fall to an average of $3.80 per gallon in the third quarter, down from over $4.20 in the second quarter, before declining to around $3.40 per gallon by year-end — reflecting an annual average of $3.64 per gallon for 2026. For 2027, the agency projected gasoline prices would drop to roughly $3.10 per gallon under its assumption of sustained lower crude costs. eia.gov

The renewed hostilities cast doubt over these projections. As of Wednesday, maritime tracking data showed the Strait of Hormuz remained effectively impaired, with only about 34 ships transiting daily compared with a prewar norm of roughly 83. The EIA acknowledged in its report that “heightened risk” in global petroleum markets could keep retail fuel margins elevated even as crude prices fall. straits.live eia.gov

The agency’s outlook now represents a best-case scenario that assumed the June 18 deal would hold — an assumption that unraveled within hours of publication.