US EIA raises Brent outlook to $87/b on Hormuz shipping constraints

The US Energy Information Administration raised Aug. 11 its Brent crude oil price outlook for 2026 to $87/barrel, up $5 from a month ago, due to constraints on shipping through the Strait of Hormuz impacting oil production.

"We have increased our estimates of Middle East shut-in crude oil production in the coming months compared with our July forecast due to continued severe constraints on Strait of Hormuz transits, which we assume persist through August," the EIA said in its Short-Term Energy Outlook.

The EIA estimates that crude oil and petroleum liquids shipped through the Strait of Hormuz averaged 4.9 million b/d in the second quarter of 2026, down from an average of 21.6 million b/d in the fourth quarter of 2025.

Production shut-ins averaged 5.5 million b/d in July, down from an estimated 7.5 b/d million in June and an average of 10.1 million b/d between March and May, the outlook said.

Flows of crude and liquids through the Bab al-Mandab Strait averaged 8.1 million b/d in the second quarter of 2026, up from an average of 5.4 million b/d in the fourth quarter of 2025, the outlook said.

The shift in flows came as Saudi Arabia re-routed crude oil away from the Strait of Hormuz through the East-West pipeline to the port of Yanbu on the Red Sea, the EIA said.

"We do not assume that the recent threats to ships transporting Saudi Arabian crude oil through the Bab al-Mandab Strait have resulted in any additional shut-ins of crude oil production," the outlook said.

The EIA expects most crude oil production in the region to return to near preconflict averages in early 2027, leading the Brent spot price to gradually drop to an average of $69/b in 2027, the outlook said.

US crude oil production is expected to average 13.8 million b/d in 2026, up 20,000 from the July estimate, according to the outlook. In 2027, US crude production is forecast to average 14.15 million b/d, up 120,000 from last month's outlook.

US commercial crude oil inventories are expected to be below the five-year low through the end of 2026, the EIA said.

"Increased crude oil exports, reduced imports, and high refinery runs since mid-April have led to consistent weekly declines in crude oil stocks," the outlook said.

High crack spreads through the end of 2026 are expected to result in high crude oil inputs to refineries, the EIA said. Through the first seven months of the year, crude oil inputs to refineries have been the highest since 2019, the agency said.

Tighter global refined products market conditions are expected to support US refinery margins through the end of the year, the agency said.

"Lower refined product exports from Russia, the resumption of the conflict around the Strait of Hormuz (limiting the flow of products from refineries in Saudi Arabia and Kuwait), and reduced crude runs through the refineries in China have all contributed to lower global refining activity," the EIA said.

Retail gasoline is expected to average $3.78/gallon in 2026, which is up 14 cents from the July outlook, the data showed. Diesel is forecast to average $4.85/gal in 2026, up 24 cents from a month ago, according to the outlook.