The US Energy Information Administration expects Brent crude prices to remain elevated through 2026 as disruptions in the Strait of Hormuz weigh on global oil flows and inventories, according to its August Short-Term Energy Outlook on Tuesday.
Brent crude fell to $69 per barrel on July 2 after the US and Iran signed a memorandum of understanding in June.
Renewed tanker attacks around the Strait of Hormuz later pushed prices higher, with Brent reaching $105/bbl on July 23 as shipments through the waterway declined.
A new blockade threat involving Saudi Arabia's oil exports through the Bab el-Mandeb Strait added pressure, while Riyadh retained alternative routes through the Suez Canal and Sumed pipeline.
Those alternatives have lower capacity, higher costs and longer transit times, limiting their ability to replace disrupted shipments through the Strait of Hormuz, the EIA said.
The EIA estimates crude oil and petroleum liquids through Hormuz averaged 4.9 million barrels per day in 2Q26, down from 21.6 million b/d in 4Q25 before the conflict.
Meanwhile, flows through Bab el-Mandeb averaged 8.1 million b/d in 2Q26, up from 5.4 million b/d in Q4 2025 as Saudi Arabia redirected crude through the East-West pipeline to Yanbu.
The EIA estimated production shut-ins averaged 5.5 million b/d in July and expects Hormuz shipments to remain severely constrained through August before gradually increasing in September.
The agency expects global production and trade patterns to broadly return to pre-conflict conditions by early 2027, although some Persian Gulf producers may not restore output to previous averages.
Global oil inventories fell by an average of 4.2 million b/d in Q2 2026, and the EIA expects inventories to decline by another 3.8 million b/d on average in Q3 2026.
The EIA expects Brent to average about $85/bbl in Q3 2026, $11/bbl above its previous forecast, before declining to $78/bbl in Q4 2026 as oil flows recover.
Most shut-in production should return in Q1 2027, allowing global inventories to rebuild and gradually pushing Brent toward an average of $69/bbl in 2027, the agency said.
US commercial crude inventories should remain below the 2021-2025 five-year low through the end of 2026 as refiners maintain high runs and net imports stay low.
US crude net imports fell below 1 million b/d in April and May as crude exports reached historically high levels while imports declined, putting pressure on domestic stocks.
US commercial crude inventories declined each week from April 17 through June 26 and fell by 25 million barrels in May, 15 million barrels in June, and 4 million barrels in July.
High refinery margins should support elevated US crude inputs through the end of 2026, with refinery inputs during the first seven months reaching their highest level since 2019.
US refinery demand for crude oil should average about 17 million b/d through August, before seasonal maintenance pushes inputs below 16 million b/d on average in October, the EIA said.
Refinery margins rose in July as lower Russian product exports, disrupted flows from Saudi Arabia and Kuwait, and reduced Chinese refinery runs tightened global petroleum product markets, supporting US refining margins through year-end.