Overview
The U.S. Energy Information Administration raised its global oil production outlook after the Strait of Hormuz reopened following an agreement between the United States and Iran dated June 18. The EIA now expects worldwide crude oil production and trade flows to recover to near pre-conflict levels by the end of this year. In its updated view, the agency said most production that had been shut in is likely to be back online by the first quarter of 2027.
Brent crude and price revisions
The EIA noted that Brent crude spot prices averaged $85 per barrel in June. That average represents a $22-per-barrel decline from May and is $32 per barrel lower than the April 2026 peak. On the forecasting side, the agency projects Brent to average $74 per barrel in the third quarter of 2026 - a forecast that is $27 per barrel lower than the agency's estimate last month. Looking further ahead, the EIA expects Brent to fall to an average of $65 per barrel in 2027 as oil inventory builds continue.
U.S. gasoline outlook
The EIA adjusted its U.S. retail gasoline price forecasts downward in tandem with the oil outlook. The agency projects U.S. retail gasoline prices will decline to $3.80 per gallon in the third quarter of 2026, down from $4.21 per gallon in the second quarter. Prices are forecast to drop further to about $3.40 per gallon in the fourth quarter, and the annual average is expected to fall below $3.10 per gallon in 2027.
For the nearer term, the EIA said average U.S. retail gasoline prices will be about $3.60 per gallon in the second half of this year, which is lower than the $4.48 per gallon reported in May.
Natural gas projection
Turning to natural gas, the EIA forecasts Henry Hub spot prices to average close to $3.70 per million British thermal units in 2026, before easing to below $3.50 per million British thermal units in 2027.
Implications
The agency's updated outlook ties the reopening of a major maritime choke point to a quicker normalization of global crude flows, with associated downward pressure on benchmark oil prices and U.S. retail fuel costs. The EIA's projections extend into 2027 for both the timing of restored production and the trajectory of energy prices.