Market Speak: EIA expects Brent to stay elevated in 2026 before easing in 2027- STEO

The US Energy Information Administration (EIA), in its September 2026 Short-Term Energy Outlook (STEO) released yesterday, said Middle East oil production is expected to gradually recover in the coming months as flows through the Strait of Hormuz improve and producers increasingly use alternative export routes. However, the EIA expects some constraints on regional oil exports to persist through the end of 2026, keeping crude production below pre-conflict averages until 2Q27. Global oil prices rose to an average of $91 per barrel in August, up $7 from July, amid an estimated 400 million-barrel decline in global inventories so far this year. The market has also been supported by disruptions to Iranian exports following renewed US restrictions and sanctions, while attacks affecting Saudi Arabia?s shipments through the Bab el-Mandeb reduced exports from Yanbu by around half from July. Saudi Arabia has responded by increasing shipments through the longer and more expensive Suez Canal route, while also exploring ship-to-ship transfers outside the Persian Gulf. With global inventories expected to remain under pressure through year-end, the EIA expects Brent crude to average around $90 per barrel in 2H26. However, as Middle East production gradually recovers and inventories rebuild, Brent is projected to ease toward an average of $74 per barrel in 2027.

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