EIA Increases Global Oil Production Forecast After the Opening of the Strait of Hormuz
July 7, 2026 - The U.S. Energy Information Administration published its July Short-Term Energy Outlook (STEO), increasing its expectations for global oil production.
Shipping traffic through the Strait of Hormuz has increased following the June 18 memorandum of understanding (MOU) between the United States and Iran to end a months-long conflict and reopen the strait. EIA now expects worldwide crude oil production and trade flows to rebound to near pre-conflict levels by year’s end, with most previously shut in production returning online by the first quarter of 2027. EIA forecasts that more oil production globally will lower crude oil and gasoline prices, with the U.S. average retail gasoline prices averaging about $3.60 per gallon (gal) in the second half of this year, down from $4.48/gal in May.
Key takeaways from the July STEO are below.
- Global oil markets. Following the June 18 MOU between the United States and Iran to end the conflict and increased traffic through the Strait of Hormuz, EIA increased its forecast for global oil production and now expects crude oil output and trade flows to return to near pre-conflict levels by year end, with most shut in production restored by early 2027.
- Crude oil price forecast. Rising global oil supply and slowing inventory withdrawals have pushed oil prices lower. The Brent crude oil spot price averaged $85 per barrel (b) in June, down $22/b from May and $32/b from the April 2026 peak. EIA forecasts Brent crude oil prices to average $74/b in the third quarter of 2026, $27/b lower than last month’s forecast. EIA expects continued oil inventory builds over the next year will push crude oil prices lower, with Brent falling to an average of $65/b in 2027.
- U.S. gasoline prices. Lower crude oil prices will contribute to a drop in U.S. retail gasoline prices, with EIA’s forecast showing 3Q26 averages declining to $3.80/gal from $4.21/gal in 2Q26. Although tight gasoline inventories keep refiners’ margins elevated in the near term, we expect rebuilding stocks and the end of the summer demand season to narrow those margins and push prices even lower to about $3.40/gal in 4Q26, with the annual average falling below $3.10/gal in 2027.
- Natural gas prices. Record U.S. natural gas production will help meet rising demand and push prices lower, with Henry Hub spot prices averaging close to $3.70 per million British thermal units (MMBtu) in 2026 before easing below $3.50/MMBtu in 2027.
