BAKU, Azerbaijan, October 6. The U.S. Energy
Information Administration (EIA) has raised its forecast for Brent
crude oil prices in Q4 2026 amid ongoing disruptions to oil
supplies from the Middle East, attacks on oil infrastructure, and a
decline in global inventories.
According to the October issue of the Short-Term Energy Outlook
(STEO), the EIA expects Brent crude oil spot price to average $105
per barrel (b) in 4Q26, $14/b higher than in last month’s STEO.
“Although we expect oil production and supplies from the Middle
East to increase, we have raised our forecast for the global oil
price compared with last month,” the EIA report states.
According to the agency, the attacks on the East-West pipeline
in Saudi Arabia highlight the potential for continued volatility in
physical oil flows and oil prices amid ongoing withdrawals of oil
inventories globally.
As EIA analysts note, additional upward pressure on crude oil
prices stems from extreme tightness in diesel markets that raises
demand for crude oil for refiners to meet diesel demand.
The price of Brent reached $114 in
September
The Brent crude oil spot price increased to an average of $114
per barrel (b) in September, $23/b higher than in August. The EIA
attributes the increase to increased attacks on oil infrastructure
and tankers around the
Middle East.
The most notable among these developments were attacks on Saudi
Arabia’s East-West oil pipeline, which temporarily halted flows on
a crucial bypass used to circumvent the Strait of Hormuz.
According to the EIA’s estimates, before the attacks, this
pipeline was shipping more than 5.0 million barrels per day (b/d)
of
oil exports via Saudi Arabia’s Yanbu port on the Red Sea.
“The disruption of the pipeline led to the daily Brent spot
price reaching as high as $131/b on September 15, as buyers
scrambled to secure near-term
supplies due to the loss of Saudi exports. Daily prices eased
somewhat during the last week of September as the East-West
pipeline in Saudi
Arabia was repaired and partially resumed flows as of September
22,” the report states.
Some of the decrease in Red Sea exports has been offset by
shifting exports back through the Strait of Hormuz. Ship tracking
data from
Vortexa indicates that oil shipments through the Strait of Hormuz
increased slightly in September as Saudi Arabia increasingly used
ship-to-ship transfers along Oman’s coast.
Production disruptions are decreasing
Despite the rise in the number of attacks, the EIA estimates
that oil exports from the Middle East increased in September
compared with August, while the volume of production curtailments
decreased.
“We assess that crude oil production shut-ins averaged 4.8
million b/d in September, down from 5.8 million b/d in
August and down from 10.9 million b/d at the peak in May,” the
report states.
In the fourth quarter of 2026, the EIA expects restrictions on
oil flows from the Middle East to persist. The average volume of
curtailed production is forecast to be 4.5 million barrels per
day.
High tanker rates are putting further pressure on
prices
The EIA also notes an increase in risks for tankers transiting
the region. This has led to higher freight rates and insurance
costs, and has also increased the risk premium factored into oil
prices.
“High tanker rates, which reached record levels in
September, reflect increasing insurance costs and are putting
additional upward pressure on delivered
crude oil prices to refiners,” the EIA notes.
In addition, vessels are forced to take longer routes to avoid
conflict zones, which reduces the number of available tankers.
Against this backdrop, the EIA estimates that global oil
inventories declined by an average of 1.9 million b/d in the third
quarter of 2026 and will fall an additional 0.7 million b/d on
average in 4Q26.
EIA expects prices to decline in 2027
Despite raising its short-term forecast, the EIA expects prices
to decline gradually.
“Although we raised our crude oil price forecast from last
month, we still expect oil prices to generally fall from their
early October average,” the forecast states.
The agency expects that alternative routes for oil exports from
the Middle East — including pipelines and overland bypass routes,
ship-to-ship transfers, and new bypass pipeline capacity in the
UAE, which is expected to come online in 2027- will allow for a
gradual reduction in the volume of suspended production.
The EIA forecasts that most of the region’s oil production will
return to pre-conflict average levels by the end of the second
quarter of 2027.
Against this backdrop, the agency expects the average price of
Brent to fall to $87 per barrel in the second quarter of 2027 and,
as global inventories recover, to $74 per barrel in the fourth
quarter of 2027.
At the same time, the EIA warns that the conflict in the Middle
East will lead to continued volatility in crude oil flows both
through the Strait of Hormuz and through alternative routes, which
will likely lead to more volatility in short-term price movements
than forecast indicates.
