Global oil output and trade flows should rebound fully by the end of this year from the disruptions caused by the Iran war, the U.S. Energy Information Administration (EIA) said on Tuesday.
Price Forecast Drastically Revised
The EIA now expects global benchmark Brent crude oil prices will average around $74 a barrel in the spot market during the third quarter of this year, down from an average of $85 in June, according to the agency. This marks a sharp downward revision from last month's forecast, when the EIA had projected Brent prices would average over $101 a barrel in the third quarter. The updated outlook reflects the easing of supply disruptions and the expected return of oil production.
Supply Disruption and Recovery
The months-long blockade of the Strait of Hormuz during the war has shut in millions of barrels of daily oil production from across West Asia, forcing refiners from Europe to Asia to reduce fuel output, the EIA reported. However, vessel movement through the waterway has risen in recent days following a preliminary deal between the U.S. and Iran. Although passage through Hormuz is not yet totally safe, the EIA has raised its annual oil production expectations while lowering its oil and motor fuel price forecasts.
The agency expects most of the oil output previously shut-in across the Middle East to return online by the first quarter of 2027. That will lift global supply and reduce withdrawals from stockpiles, which should help keep prices under control in the months ahead, the EIA said.
Impact on U.S. Motor Fuel Prices
| Metric | Q2 2026 | Q3 2026 Forecast |
|---|---|---|
| U.S. retail gasoline price (per gallon) | $4.21 | $3.80 |
| Brent crude spot price (per barrel) | $85 (June) | ~$74 |
Lower crude oil prices will contribute to a drop in U.S. retail gasoline prices, the EIA said. The agency now expects U.S. motor fuel prices will average about $3.80 a gallon in the third quarter, down from $4.21 a gallon in the second quarter. The knock-on effects of the Iran war had pushed U.S. motor fuel prices to multi-year highs, posing a major political worry for President Donald Trump and his Republican Party ahead of November's midterms.
Outlook
With the recovery of Middle East production expected by early 2027, global supply is set to increase, putting further downward pressure on prices. The EIA's revised forecasts signal that the worst of the supply crisis may be over, though risks remain until Hormuz passage is fully secure.
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