In its September Short-Term Energy Outlook, the EIA revised its crude oil outlook to reflect the prolonged and escalating conflict in the Middle East. The agency now assumes most Middle Eastern production and trade flows will return to pre-conflict levels during 2Q27. The outlook was released September 9 using forecasts completed September 3.
The EIA narrowed its projected global deficit for 3Q26 to 3.0 MMBbl/d from 3.8 MMBbl/d in its August report as shippers increasingly found workarounds to move Middle Eastern crude despite ongoing disruptions. Barrels have continued to flow through pipelines and overland bypass routes, ship-to-ship transfers and other alternative routes. However, the EIA expanded its projected 4Q26 inventory draw to 1.7 MMBbl/d from 0.6 MMBbl/d after extending its assumption of constrained Middle Eastern production and trade flows through the end of 2026.
Looking toward 2027, projected inventory builds in 1Q27 were revised lower, but the full-year build edged higher by 100 MBbl/d to approximately 4.9 MMBbl/d following upward production revisions. The EIA expects Middle Eastern exports to gradually recover as shippers expand their use of alternative routes. This includes existing pipeline and overland capacity, additional ship-to-ship transfers and new bypass pipeline capacity in the UAE that is expected to enter service in mid-2027.
The agency expects oil prices to remain elevated until Middle Eastern flows normalize and global inventories begin rebuilding. The EIA now forecasts WTI to average $84.01/Bbl in 3Q26, nearly $3/Bbl above its August forecast. The revision was more significant for 4Q26, with the forecast rising to approximately $86/Bbl from $74/Bbl previously. Despite expectations for substantial inventory builds in 2027, the agency raised its full-year WTI forecast to $69.74/Bbl from $65.38/Bbl. The EIA also cautioned that changing conditions in the conflict could create greater short-term price volatility than its forecasts indicate.
Although the conflict has tightened global oil balances, the EIA still expects the market to shift into surplus as Middle Eastern production and trade flows recover. With supply growth outpacing demand and inventories rebuilding, the agency forecasts WTI prices will decline throughout 2027.