The US Energy Information Administration delivered a sharp downgrade to its oil and gas price outlook on Monday, slashing its 2026 Brent crude forecast to $82 per barrel from $95 in its previous estimate. The 14 percent cut reflects the deepening impact of the Strait of Hormuz crisis on global supply chains and a reassessment of inventory dynamics heading into the final quarter of the year.
The EIA’s August Short-Term Energy Outlook projects Brent will average $74 per barrel in the third quarter, a reduction of $27 per barrel from last month’s forecast. For 2027, the agency cut its Brent estimate to $65 per barrel from $79, signaling expectations that ongoing oil inventory accumulation will continue to pressure prices downward even if the Hormuz situation stabilizes.
The downward revision extends to natural gas as well. The EIA now expects Henry Hub spot prices to average $2.87 per million British thermal units in the third quarter, down 50 cents from its July forecast. The agency cited reduced LNG feedgas demand due to maintenance at Freeport LNG and other export terminals, combined with record US dry natural gas production projected at 111.19 billion cubic feet per day for 2026.
US liquefied natural gas exports were trimmed by 0.2 billion cubic feet per day to 16.5 billion cubic feet per day for the third quarter. Maintenance at Freeport LNG, which began on July 10 and is expected to continue through late August, has disrupted flows from one of the Gulf Coast’s key export facilities. The EIA projects total US LNG exports will average 17.4 billion cubic feet per day for the full year.
On the storage front, the EIA forecasts US natural gas inventories will reach a record 3,985 billion cubic feet by the end of October, 5 percent above the five-year average. The surplus reflects a combination of strong domestic production and muted export demand, giving the market a substantial cushion heading into the winter heating season.
The retail gasoline price forecast for 2026 stands at $3.64 per gallon, while US crude oil production is expected to average 13.8 million barrels per day. The agency projects total US CO2 emissions at 4,819 million metric tons for 2026, down slightly from 4,904 million in 2025.
The EIA’s updated outlook arrives as the Strait of Hormuz crisis enters its sixth month, with the US naval blockade of Iranian ports and Iran’s retaliatory restrictions on shipping continuing to reshape global energy flows. Despite a modest recovery in OPEC+ production, the agency’s revisions underscore that the market is grappling with far more complex dynamics than a simple supply-demand rebalancing.
Sources: EIA Short-Term Energy Outlook – Natural Gas, EIA Short-Term Energy Outlook, EIA Daily Prices
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