EIA Raises Oil Production Forecast After Reopening of Strait of Hormuz

The US Energy Information Administration (EIA) has raised its global oil production forecast following the reopening of the Strait of Hormuz. This decision comes after the agreement between the US and Iran on June 18. The agency predicts that global crude oil production and trade flows will recover to near pre-conflict levels by the end of this year. Most of the previously halted production is expected to come back online by the first quarter of 2027. The Brent crude oil spot price averaged $85 per barrel in June, down $22 per barrel from May and $32 per barrel from the April 2026 peak. The EIA forecasts that Brent crude oil prices will average $74 per barrel in the third quarter of 2026, $27 per barrel lower than last month's forecast. The agency expects Brent prices to fall to an average of $65 per barrel in 2027, driven by continued inventory builds. US retail gasoline prices are expected to decline to $3.80 per gallon in the third quarter of 2026, down from $4.21 per gallon in the second quarter. The EIA predicts that prices will fall to around $3.40 per gallon in the fourth quarter. The annual average is expected to drop below $3.10 per gallon in 2027. The agency said US average retail gasoline prices will be around $3.60 per gallon in the second half of this year, down from $4.48 per gallon in May. On the natural gas side, the EIA expects Henry Hub spot prices to average around $3.70 per million British thermal units in 2026 and fall below $3.50 per million British thermal units in 2027. The reopening of the Strait of Hormuz could bring new momentum to the oil markets. However, the future of global energy markets depends on various factors. The Blow to the Energy Corridor will be an important factor to watch in the coming months to see how developments in oil production will affect global energy markets.