The U.S. Energy Information Administration (EIA) is predicting an oil market crunch in 2026 and a glut in 2027, the organization’s latest short term energy outlook (STEO), which was released earlier this month, revealed.
According to its August STEO, the EIA sees world petroleum and other liquid fuels consumption outweighing production by 1.91 million barrels per day in 2026 and world petroleum and other liquid fuels production outweighing demand by 4.78 million barrels per day in 2027.
For 2026, the EIA’s August STEO sees consumption coming in at 102.73 million barrels per day and production averaging 100.82 million barrels per day. The EIA projects that demand will hit 104.96 million barrels per day next year and that production will come in at 109.74 million barrels per day.
In its latest STEO, the EIA forecasts that the oil market crunch will come in at 3.83 million barrels per day in the third quarter of 2026 and 0.63 million barrels per day in the fourth quarter, before swinging to a glut of 3.83 million barrels per day in the first quarter of next year, 4.59 million barrels per day in the second quarter, 4.84 million barrels per day in the third quarter, and 5.82 million barrels per day in the fourth quarter.
There was an oil market crunch of 4.21 million barrels per day in the second quarter and a glut of 1.07 million barrels per day in the first quarter, the EIA’s latest STEO showed.
This STEO highlighted that, in 2025, world petroleum and other liquid fuels production averaged 106.12 million barrels per day and world petroleum and other liquid fuels consumption came in at 103.98 million barrels per day. This represented a glut of 2.13 million barrels per day in 2025, the August STEO outlined.
“Because of the large drawdown in global inventories triggered by continued disruptions in the Strait of Hormuz, we forecast that oil prices will remain elevated until global oil flows return to normal and oil inventories are replenished,” the EIA said in its latest STEO.
“We estimate that global oil inventories fell by an average of 4.2 million barrels per day in 2Q26 and that they will fall by an additional 3.8 million barrels per day on average in 3Q26,” it added.
“As a result, we forecast the Brent crude oil spot price will average around $85 per barrel in 3Q26, $11 per barrel higher than in last month’s STEO,” it continued.
“Once the traffic through the Strait of Hormuz gradually increases and shut-in oil production increasingly restarts, we forecast oil prices will begin to fall, decreasing to an average of $78 per barrel by 4Q26,” the EIA said.
“We assess that most shut-in oil production will be largely restored in 1Q27 and that global oil inventories will again start building, gradually lowering oil prices to an average of $69 per barrel in 2027,” the EIA noted in its STEO.
In a section of its August STEO highlighting its global oil market assumptions, the EIA stated that it had increased its estimates of Middle East shut-in crude oil production in the coming months compared with its July forecast “due to continued severe constraints on Strait of Hormuz transits”, which it said it assumed would persist through August.
The EIA noted in this section that it expects most crude oil production in the region to return to near pre-conflict averages in early 2027 but pointed out that it sees ongoing disruptions of about 0.6 million barrels per day to continue through the end of next year.
In its August STEO, the EIA highlights that world petroleum and other liquid fuels production includes crude oil, lease condensate, natural gas plant liquids, other liquids, refinery processing gain, and other unaccounted-for liquids.
“Differences in the reported historical production data across countries could result in some inconsistencies in the delineation between crude oil and other liquid fuels,” the STEO points out.
The EIA also notes on its August STEO that consumption of petroleum by the OECD countries is the same as ‘petroleum product supplied’, defined in the glossary of the EIA Petroleum Supply Monthly (DOE/EIA-0109). Consumption of petroleum by the non-OECD countries is ‘apparent consumption’, which includes internal consumption, refinery fuel and loss, and bunkering, the EIA states in the STEO.
The EIA highlighted in its latest STEO that it completed modeling and analysis for its report on August 6.
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