The U.S. Energy Information Administration is forecasting a dramatic swing in global oil markets, projecting a supply deficit of 1.91 million barrels per day in 2026 followed by a massive surplus of 4.78 million barrels per day in 2027. The EIA August Short-Term Energy Outlook, analyzed by Rigzone on Thursday, paints a picture of an oil market under severe strain from the ongoing Strait of Hormuz crisis, with a sharp reversal once disrupted production restarts. The forecast highlights the whiplash facing producers and consumers as the six-month conflict reshapes global energy flows.
Q3 Deficit Deepens as Inventories Drain
Global petroleum and other liquid fuels consumption is projected at 102.73 million bpd in 2026, while production averages just 100.82 million bpd. The quarterly picture is even more stark: the deficit peaks at 3.83 million bpd in the third quarter before narrowing to 0.63 million bpd in the fourth quarter. The EIA estimates that global oil inventories fell by an average of 4.2 million bpd in the second quarter and will decline by an additional 3.8 million bpd in the third quarter, rapidly depleting buffers that had taken years to build.
Brent to Average $85 This Quarter
The agency forecasts Brent crude oil will average around $85 per barrel in Q3 2026, $11 per barrel higher than in last month outlook. Prices are then expected to ease to $78 per barrel by Q4 as Hormuz traffic gradually increases and shut-in production restarts. For 2027, the EIA projects Brent will average $69 per barrel as the market swings to surplus and inventories rebuild. Most shut-in production is expected to be largely restored in the first quarter of 2027, though ongoing disruptions of about 0.6 million bpd are forecast to persist through the end of next year.
Hormuz Disruptions Worsen in Latest Assessment
The EIA noted it increased its estimates of Middle East shut-in crude production compared with its July forecast, citing continued severe constraints on Strait of Hormuz transits. The agency assumed these restrictions would persist through August. The Strait of Hormuz, through which roughly 20% of the world oil supply normally passes, has been effectively closed for months amid the U.S.-Israeli conflict with Iran.
| Period | Supply-Demand Balance | Brent Price |
|---|---|---|
| Q2 2026 | Surplus of 1.07 mbpd | – |
| Q3 2026 | Deficit of 3.83 mbpd | $85/bbl |
| Q4 2026 | Deficit of 0.63 mbpd | $78/bbl |
| Q1 2027 | Glut of 3.83 mbpd | – |
| 2027 average | Glut of 4.78 mbpd | $69/bbl |
The forecast underscores how the prolonged Hormuz crisis has created a two-phase shock: an acute supply squeeze this year followed by a potential price collapse once disrupted flows resume. The EIA projects that once traffic through the Strait gradually increases and shut-in oil production restarts, prices will begin falling, eventually dropping to an average of $69 per barrel in 2027. The dramatic reversal could create volatile conditions across the energy sector, affecting everything from refinery margins to drilling investment decisions.
Sources: Rigzone; U.S. Energy Information Administration August 2026 Short-Term Energy Outlook; Reuters
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