US EIA hikes oil price forecasts again as Iran war drains global stockpile

• The Iran war has caused production shut-ins of 4.5 million barrels per day in Q4 2026, expected to fall to 2.7 million bpd by Q1 2027 as alternative export routes expand
• US retail diesel prices hit record highs last month and are expected to remain above $6 per gallon in October before easing to roughly $4.50 per gallon in 2027
• Gulf oil flows excluding Iran have recovered to more than 81% of pre-war levels through workarounds like Saudi Arabia's East-West Pipeline and 'dark transits' with disabled tracking systems

Summary: EIA Raises Oil Price Forecasts Amid Iran War Supply Disruptions

The US Energy Information Administration (EIA) has significantly increased its oil price forecasts due to falling global stockpiles and supply disruptions from the ongoing US-Israeli war with Iran.

Key Price Forecasts:

• Brent crude: Expected to average $98/barrel in 2026 (up 8% from previous forecast)
• Q4 2026: $105/barrel (up $14 from prior estimate)
• 2027: $84/barrel (up $10 from previous forecast)
• US retail diesel: Above $6/gallon in October, gradually declining to approximately $4.50/gallon in 2027

Supply Disruptions:

The conflict has severely impacted oil flows through the Strait of Hormuz, which previously carried approximately 20% of global oil supplies. Iranian retaliatory strikes have damaged regional energy infrastructure. Production shut-ins are estimated at 4.5 million barrels per day (bpd) in Q4 2026, expected to decrease to 2.7 million bpd by Q1 2027.

Market Adaptations:

Regional producers are implementing workarounds to mitigate disruptions:

• Saudi Arabia restarted shipments through its East-West Pipeline to the Red Sea, bypassing the Strait
• Exporters utilizing "dark transits" (disabling tracking systems) and ship-to-ship cargo transfers
• Gulf oil flows (excluding Iran) have recovered to over 81% of previous levels

Market Implications:

Tight diesel markets and declining inventories are expected to keep crude prices elevated in the near term. However, as alternative export routes expand and transit through the Strait improves, prices should moderate in 2027 as inventories rebuild.