Uche Cecil Izuora
The US Energy Information Administration (EIA), has released its April Short-Term Energy Outlook, estimating that Brent crude averaged $103 a barrel in March and will climb to a quarterly peak of about $115 barrel in second-quarter 2026, reflecting a sharp tightening in global supply following widespread production shut-ins across key Gulf producers.
Global oil markets have entered a period of acute volatility, with prices expected to surge into second-quarter 2026 as war-driven supply disruptions in the Middle East constrain flows through the Strait of Hormuz.
The disruption stems from the effective closure of the Strait of Hormuz, a critical chokepoint that typically carries nearly 20 per cent of global oil supply. The US-Iran war in the region has forced producers including Saudi Arabia, Iraq, Kuwait, and the UAE to curtail output significantly.
The EIA estimates that crude production shut-ins averaged 7.5 million b/d in March and will rise to a peak of 9.1 million b/d in April.
In this outlook, EIA assumes the conflict does not persist past April and that traffic through the Strait of Hormuz gradually resumes. Under those assumptions, EIA expects production shut-ins will fall to 6.7 million b/d in May and return close to pre-conflict levels in late 2026.
The scale of the outage has rapidly flipped the market from prior expectations of oversupply into a pronounced deficit, with global inventories drawing sharply during the second quarter. Despite an assumption that the conflict does not persist beyond April, the agency warns that supply chains will take months to normalize, keeping a geopolitical risk premium embedded in prices through late 2026.
EIA forecasts the Brent crude oil price will fall below $90/bbl in fourth-quarter 2026 and average $76/bbl in 2027, about $23/bbl higher than in its February STEO forecast.
This price forecast is highly dependent on EIA’s assumptions of both the duration of conflict in the Middle East and resulting outages in oil production.
At the same time, global oil demand growth has been revised sharply lower to 0.6 million b/d in 2026, down from prior expectations of 1.2 million b/d, as high prices and supply shortages dampen consumption particularly in Asia.
The supply shock has also widened the Brent-WTI spread, which averaged $12/bbl in March and is expected to peak near $15/bbl in April.
The divergence reflects Brent’s greater exposure to international markets and shipping disruptions, while relatively high US inventories and policy measures—including releases from the Strategic Petroleum Reserve—have helped moderate domestic price increases.
Higher crude prices are feeding directly into refined product markets, with US retail gasoline prices expected to approach $4.30/gal in April and average $3.70/gal in 2026. Diesel markets remain particularly tight, with prices projected to exceed $5.80/gal in April and average $4.80/gal for the year.
Reduced LNG flows from the Middle East have widened global price spreads and pushed US export facilities to near full capacity.
EIA estimates US LNG exports were 17.9 bcfd in March, an 8% increase over the January STEO forecast and the second-highest LNG export volume on record following December 2025. The widening spread between domestic and international prices as a result of continued disruptions to LNG exports through the Strait of Hormuz encourages increased LNG exports from the US, although capacity is constrained.
The EIA forecasts that full-year 2026 LNG exports will total 17.0 bcfd, up from 16.4 bcfd in its January forecast, and 2027 exports will total 18.6 bcfd, both above the previous annual record of 15.1 bcfd set in 2025.
Damage to Qatar’s Ras Laffan export plant representing roughly 17 per cent of its liquefaction capacity has further tightened global LNG supply, reinforcing upward pressure on international gas prices.
As of March, 19, QatarEnergy estimates repairs on those trains to take up to 5 years