Market Speak: EIA STEO report signals tighter global oil market

The latest Short-Term Energy Outlook (STEO), released by the US Energy Information Administration (EIA), projects continued pressure on global oil supplies as severe constraints on crude shipments through the Strait of Hormuz are expected to persist through August. The EIA has raised its estimates for Middle East crude production shut-ins and expects disruptions of around 0.6 million barrels per day to continue through the end of 2027.

Brent Crude Seen Near $85 in Q3 2026: The EIA expects reduced oil flows through the Strait of Hormuz to further draw down global inventories, keeping Brent crude oil prices near recent levels. Brent is forecast to average around $85 per barrel in Q3 2026 before gradually declining to about $69 per barrel in 2027 as production recovers and inventories rebuild.

US Crude Stocks to Stay Below Five-Year Low: US commercial crude oil inventories are expected to remain below the 2021–2025 five-year low through the end of 2026. Strong exports, lower imports and high refinery runs since mid-April have contributed to sustained inventory declines, while US net imports are expected to remain below average through 2027 amid strong international demand for American crude.

Middle East Supply Recovery Expected in 2027: The EIA expects most Middle East crude production to return close to pre-conflict averages in early 2027. However, ongoing disruptions are expected to keep around 0.6 million barrels per day of production offline through the end of 2027, leaving supply risks elevated even as the broader market gradually rebalances.

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