EIA: Iran war disrupts supply, Brent crude will stay above $95 in the next two months

On Tuesday, March 10, local time, the U.S. Energy Information Administration (EIA) stated in its monthly report that due to the disruption of oil supplies caused by the Iran war, Brent crude oil prices are expected to stay above $95 per barrel for the next two months. Afterward, as supplies recover, prices may fall to around $70 per barrel by the end of this year.

In its “Short-Term Energy Outlook” on Tuesday, the EIA pointed out that the blockade of the Strait of Hormuz, a critical shipping passage, has severely impacted oil transportation.

The Strait of Hormuz connects the Persian Gulf and the Indian Ocean and is the only waterway into the Persian Gulf. It accounts for nearly one-third of global seaborne crude oil transportation and one-fifth of global liquefied natural gas (LNG) shipments.

After the outbreak of war, Iran blocked the Strait of Hormuz, and the disruption of transportation is expected to lead to further declines in oil production in the Middle East over the coming weeks.

On Monday, reports indicated that Saudi Arabia, the world’s largest oil exporter, has begun reducing oil production, joining other Gulf producers like Iraq and Kuwait to cut output amid transportation restrictions.

The EIA stated that as shipping gradually resumes, these production cuts will be eased over time. Once oil transportation through the Strait of Hormuz returns to normal, global oil supply will still continue to exceed demand.

As of the time of writing, Brent crude futures traded above $88 per barrel. So far this month, Brent futures have increased by approximately 21%.

The EIA sharply raised its 2026 Brent crude oil price forecast by 37% from last month to $79 per barrel. The agency also expects Brent prices to fall below $80 per barrel in the third quarter of this year.

Additionally, the EIA revised upward its US fuel price forecasts: retail gasoline prices are expected to be about $3.34 per gallon, up 14.7% from previous estimates; diesel prices are projected at $4.12 per gallon, approximately 20.1% higher than earlier predictions.

“The majority of the gasoline price increase in the coming weeks is expected to pass through to retail prices, but the normalization of refining and retail margins will be slower. As a result, prices in the second quarter will still face upward pressure, but the pace of increase will lag behind the initial price shocks,” the EIA said in its report.

The EIA also noted that rising oil prices will stimulate increased U.S. crude oil production, with an average of 13.61 million barrels per day in 2026, rising to 13.83 million barrels per day in 2027.

In comparison, the EIA previously forecasted 13.60 million barrels per day for 2026 and 13.32 million barrels per day for 2027.

(Source: Cailian Press)