The US Energy Information Administration raised its global oil production forecast in the July Short-Term Energy Outlook (STEO), its monthly report on energy prices and supply. EIA now expects worldwide crude output and trade flows to return to near pre-conflict levels by the end of the year, with most previously shut-in production back online by the first quarter of 2027.
The change follows a June 18 memorandum of understanding between the United States and Iran to end a months-long conflict and reopen the Strait of Hormuz. Traffic through the strait has increased since the agreement, and EIA points to that recovery as the basis for its higher output forecast.
Crude falls as supply returns
Brent crude averaged $85 a barrel in June, down $22 from May and $32 from the April 2026 peak, as global supply rose and inventory draws slowed. EIA now forecasts Brent at $74 a barrel in the third quarter of 2026, $27 lower than last month's call, and expects continued inventory builds to push the price to $65 a barrel by 2027. WTI, the US benchmark, was at $84.65 a barrel as of June 15 (EIA).
Gasoline follows crude lower
Retail gasoline is following crude lower. EIA expects the second-half 2026 average to run about $3.60 a gallon, down from $4.48 in May. The agency sees the third-quarter average falling to $3.80 a gallon from $4.21 in the second quarter, narrowing refiner margins pushing the price to about $3.40 in the fourth quarter, and the full 2027 average dropping below $3.10.
Production and gas supply keep climbing
US crude production is set to rise from 13.6 million barrels a day in 2025 to 13.8 million in 2026 and 14.0 million in 2027, per the STEO. Natural gas supply is also growing: EIA expects Henry Hub prices to average close to $3.70 per million British thermal units (MMBtu) in 2026 before easing below $3.50 in 2027, and US LNG gross exports to climb from 15 billion cubic feet a day in 2025 to 17 in 2026 and 19 in 2027. Spot Henry Hub was $3.06/MMBtu as of June 15 (EIA), below the full-year average EIA is now projecting.
STEO figures at a glance
| Indicator | 2025 | 2026 | 2027 |
|---|---|---|---|
| Brent crude ($/barrel) | $69 | $82 | $65 |
| Retail gasoline ($/gallon) | $3.10 | $3.64 | $3.09 |
| US crude production (million b/d) | 13.6 | 13.8 | 14.0 |
| Henry Hub ($/MMBtu) | $3.53 | $3.67 | $3.49 |
| US LNG gross exports (Bcf/d) | 15 | 17 | 19 |
Source: EIA, Short-Term Energy Outlook, July 2026.
