EIA sees Brent crude at $85 in Q3, expects prices to ease to $69 in 2027

New Delhi: Brent crude oil prices are expected to remain elevated at around $85 per barrel in the third quarter of 2026 before gradually easing to $69 per barrel in 2027 as Middle East oil production recovers, the US Energy Information Administration (EIA) said in its August Short-Term Energy Outlook.

The forecast reflects continued restrictions on oil shipments through the Strait of Hormuz, which the EIA expects to keep global oil inventories under pressure in the coming months. The agency said it has raised its estimate of Middle East crude oil production disruptions compared with its July forecast.

"We now forecast the Brent crude oil spot price to average around $85 per barrel (b) in the third quarter of 2026," the EIA said.

The agency expects most crude oil production in the region to return to near pre-conflict levels in early 2027, although disruptions of about 0.6 million barrels per day are expected to continue through the end of next year. As production recovers and inventories rebuild, Brent prices are forecast to fall to an average of USD 69 per barrel in 2027.

The outlook follows sharp price movements in July. Brent fell to as low as USD 69 per barrel on July 2 before rising to as high as USD 105 per barrel on July 23 following renewed attacks on tankers using the Strait of Hormuz and reduced shipments through the waterway.

The EIA expects US crude oil production to rise from 13.8 million barrels per day in 2026 to 14.2 million barrels per day in 2027. It also expects US commercial crude inventories to remain below their five-year 2021-25 low through the end of 2026.

Natural gas prices, meanwhile, are expected to remain relatively low. The Henry Hub spot price is forecast to average USD 2.87 per million British thermal units in the third quarter, 50 cents below the previous forecast, as strong production and lower LNG demand for feedgas push inventories higher.

The EIA expects US LNG exports to rise from 17 billion cubic feet per day in 2026 to 19 billion cubic feet per day in 2027.

On electricity, renewable generation is expected to continue growing through 2027, while lower natural gas prices are expected to support higher gas-fired generation and further reduce coal-fired power generation. Solar, hydropower and wind generation rose 21 per cent, 9 per cent and 6 per cent, respectively, in the first half of 2026.