US energy agency lifts its fourth-quarter oil price outlook by $14 a barrel, citing constrained Middle East supplies, attacks on energy infrastructure and tight diesel markets
The US Energy Information Administration (EIA) has raised its forecast for Brent crude oil prices in the fourth quarter of 2026 to an average of $105 per barrel, citing continued risks to West Asia oil supplies and tightness in global diesel markets.
The latest forecast represents a $14 per barrel increase from the EIA’s previous monthly outlook.
The agency said oil flows from the West Asia are expected to remain constrained through the fourth quarter, although regional production shut-ins in September were at their lowest level since hostilities began.
The EIA expects oil production and exports from the region to gradually recover as convoys through the Strait of Hormuz, bypass routes and increased ship-to-ship transfers help restore supplies.
However, the agency warned that attacks on energy infrastructure, including the East-West pipeline in Saudi Arabia, underscore the risk of continued volatility in physical oil supplies and crude prices.
Diesel market adds to oil price pressure
Tight diesel markets are also adding to upward pressure on crude prices, according to the EIA.
Refiners are increasing crude processing to meet strong diesel demand, which could provide additional support to oil prices in the near term.
US fuel prices rose sharply in September. Average retail gasoline prices reached $4.35 per gallon, while diesel prices climbed to $6.29 per gallon, driven by higher crude prices and stronger refining margins.
More from BusinessThe EIA expects the oil market to ease next year, with Brent crude forecast to average $84 per barrel in 2027.
US diesel prices are projected to average around $4.50 per gallon in 2027, while gasoline prices are expected to average just below $3.60 per gallon.
US diesel inventories remain under pressure
The EIA also highlighted persistent weakness in US distillate inventories.
East Coast distillate inventories were 32 per cent below their five-year seasonal average in September. The agency expects inventories to remain around 20 per cent below the 2021-2025 average through the upcoming winter.
Meanwhile, the EIA expects Henry Hub natural gas prices to average $3.16 per million British thermal units (MMBtu) in 2027, down 9 per cent from its 2026 estimate.
The decline is expected to be driven by higher-than-average inventories and rising domestic production, which are expected to offset increased liquefied natural gas exports.
The EIA said its latest forecast was finalised using market information available as of October 1 and does not include developments announced after that date, including additional energy supplies following the G7’s October 2 announcement.
