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EIA: Brent up slightly over June forecast
Expected to average $69 this year, up from $66, but dropping to $58 in 2026; Henry Hub also down to $3.70 per Btu from $4 in June Kristen Nelson Petroleum News
The U.S. Energy Information Administration said July 8 in its Short-Term Energy Outlook that it has revised its forecast for the Brent crude oil price for 2025 to an average of $69 per barrel, up 4.4% from the June forecast of $66 per barrel. The 2026 forecast, however, is down 1.3% from the June forecast of $59 per barrel to $58.
EIA said the change reflected unrest in the Middle East.
"The oil market is experiencing uncertainty from regional conflict, demand growth, and several other factors," said EIA Acting Administrator Steve Nalley. "Our forecast for lower oil prices comes from basic economic fundamentals that when supply grows faster than demand, prices decrease."
EIA said its June forecast of $66 per barrel for Brent this year was released just before the escalation of the conflict over Iran's nuclear program, with the increase "driven largely by higher near-term prices due to a more significant geopolitical risk premium from the conflict."
Significant global inventory builds are expected to exert downward pressure on prices, driving the projected $58 per barrel in 2026.
Brent averaged $66 per barrel in the first half of the year but prices increased for the first time in five months in June, averaging $71 per barrel, with the potential for higher prices in the second half of the year reflecting "the importance of the Strait of Hormuz to global oil supply," with some 20% of global petroleum shipped through the strait.
Growing inventories Even with higher geopolitical risk premiums, EIA said it anticipates growth in global oil inventories and a consequent downward price pressure.
The increase in global oil inventories was an estimated 1.2 million barrels per day in the first half of the year, with an increase of 0.9 million bpd average expected through the end of the year, and an expected 1.1 million bpd storage growth in 2026.
Although major supply disruptions are not forecast, EIA said risks to oil supply remain, including the possibility of a break in the Israel-Iran ceasefire and elevated tensions in the Russia-Ukraine conflict, along with uncertainty around trade negotiations between the U.S. and its trading partners.
Future OPEC+ decisions and member compliance are also uncertain factors.
Global consumption Global liquid fuels consumption is forecast to increase by 0.8 million bpd this year and by 1.1 million bpd next year, "driven almost entirely by demand from non-OECD countries," EIA said, where growth is forecast to average 0.9 million bpd this year and 1 million bpd next year, with OECD consumption falling 0.1 million bpd this year and largely unchanged next year.
Global liquids fuels production is forecast to rise by 1.8 million bpd this year and increase another 1.1 million bpd in 2026, with growth in countries outside OPEC+ led by the United States, Brazil, Canada and Guyana -- estimated to increase by 1.3 million bpd this year and 0.5 million in 2026.
Based on relatively weak demand growth and strong supply growth, OECD commercial inventories are expected to increase from an average of 61 days of supply in the first half of this year to 62 days in the second half and 66 days by the end of 2026. EIA said this is well above the 2018-24 average (excluding 20-21 during COVID).
US production declines EIA said U.S. crude production is forecast to decline from almost 13.5 million bpd in April to 13.3 million bpd by the end of 2026, reflecting the expectation that the West Texas Intermediate spot price will fall through 2026, ending that year at $53 per barrel, down some 22% from June 2025, and resulting in producers drilling and completing fewer wells.
Production of 13.5 million bpd in the U.S. was "an all-time high," and forecast to decline to some 13.3 million bpd in the fourth quarter of 2026, EIA said, averaging some 13.4 million bpd both this year and next.
Drilling and completion activity in the U.S. is slowing, with 5,164 well completions in Lower 48 producing states in the first half of this year. EIA said producers would have to complete more than 5,400 wells in the second half of the year to match 2024 numbers.
In 2024, "higher oil output per well meant that U.S. crude oil production grew despite relatively low well completions. This year, productivity growth has been mixed: crude oil production from newly completed wells is growing more slowly or declining in the major oil-producing regions," EIA said.
Henry Hub EIA said natural gas storage is projected to grow, resulting in lower natural gas prices. Henry Hub averaged just over $3 per million British thermal units in June and is expected to average almost $3.40 in the third quarter, down 16% from the agency's June forecast, with LNG demand and production the key price drivers.
Marketed natural gas production averaged 116.8 billion cubic feet per day in the second quarter, up 4.7 bcf per day compared to the second quarter last year, with production expected to remain near that level through 2026, EIA said, averaging some 116 bcf per day in both 2025 and 2026, sustained by higher natural gas prices.
Henry Hub averaged $3.67 per million Btu in the first half of 2025, up from $2.11 in the first half of 2024.
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