EIA Forecasts Oil Price Increases

Editor’s Note: The following release was first published in the Energy Information Administration’s (EIA) Energy Outlook.

Global oil prices. Crude oil prices rose for a third consecutive month in October as falling global inventories, attacks on oil tankers in the Persian Gulf, constrained shipping capacity and higher transportation costs tightened supply. Amid these conditions, the EIA expects the Brent crude oil spot price will remain near $100 per barrel (b) for the remainder of this year. The EIA assumes most Middle East production outside Iran to return to pre-conflict averages by the middle of next year. As depleted global oil inventories build throughout next year, the EIA forecasts the Brent spot price will gradually fall to an average of $77/b in the fourth quarter of 2027.

Crude oil inventories. U.S. commercial crude oil inventories fell to 410 million barrels at the end of October, the lowest end-of-October level since 2014. Inventories fell as a large spread between Brent and West Texas Intermediate (WTI) prices encouraged crude oil exports and lowered crude oil imports. Additionally, high crude oil inputs at U.S. refineries over the past several months have helped reduce inventories. Inventories remain below the five-year average through the middle of next year in our forecast as ongoing tightness in the global oil tanker market sustains a wide, albeit narrowing, Brent-WTI price spread. U.S. crude oil inventories gradually rise in the forecast, driven by higher net imports as the Brent–WTI spread narrows and U.S. crude oil production reaches a record 14.3 million barrels per day in 2027.

U.S. petroleum prices. Although the EIA expects the U.S. average retail price of gasoline and diesel to decline in 2027, the EIA raised its forecast for those prices from last month’s outlook. In the organization’s forecast, the U.S. retail diesel price averages $5.03 per gallon (gal) next year, 12% higher than the EIA forecast last month. Gasoline prices average $3.73/gal, 5% higher than last month. The EIA now assumes global petroleum product markets will face continued supply constraints through the end of 2027. These market conditions will support wider petroleum product crack spreads next year and incentivize elevated U.S. refinery operations.