EIA: Global crude oil prices to decline through 2026 and 2027

Global crude oil prices are expected to decline through 2026 and 2027 as rising production growth outpaces demand, leading to inventory builds, according to the US Energy Information Administration (EIA)’s latest Short-Term Energy Outlook (STEO) for February 2026.

EIA forecast Brent crude oil prices will average $58/bbl in 2026, down sharply from an estimated $69/bbl in 2025, before declining further to an average of $53/bbl in 2027. The agency said the downward trend reflects expectations for a looser global market balance and increased oil inventories over the forecast period.

While near-term prices were supported by winter-related disruptions and geopolitical risks, EIA expects expanding supply from non-OPEC producers and continued production growth globally to push markets into surplus conditions later in the forecast horizon.

“Markets also responded to questions over recent US policy action toward Iran, with oil prices recently trading higher and with greater volatility. Crude oil production in Iran has remained stable so far. We assume it will remain stable over our forecast, but acknowledge that actions targeting oil infrastructure or a conflict that affects flows through Strait of Hormuz could obviously reduce Middle East oil production and exports,” EIA said.

EIA forecasts that global oil inventory builds will average 3.1 million b/d in 2026, compared with an average build of 2.7 million b/d in 2025, before decreasing to average of 2.7 million b/d in 2027.

“Although we expect prices to fall in 2026 and remain under $60/bbl in 2027, we assess that both OPEC+ policy and China’s continued strategic inventory builds will limit declines. A large portion of oil inventory builds last year were in strategic stockpiles in China, which limited downward price pressures because these builds acted as a source of demand. We assume that China will continue building strategic stockpiles at nearly the same rate of about 1.0 million b/d in 2026, before reducing strategic builds in 2027,” said EIA.

Recently, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) expanded the scope of its general licenses, allowing more companies to transport and sell Venezuelan crude oil while sanctions remain in effect. Therefore, EIA estimates that these additional shipments will mitigate the impact of production shutdowns and allow Venezuelan oil production to recover to pre-lockdown levels by second-quarter 2026. Any further easing of sanctions or changes in US government policy toward Venezuela could lead to oil production exceeding previous forecasts and exert further downward pressure on oil prices.

US crude oil production is expected to remain elevated through 2026 but ease in 2027 as prices weaken. EIA forecast US crude output will average 13.6 million b/d in 2026, broadly stable compared with 2025, before slipping to 13.3 million b/d in 2027. Lower oil prices are expected to pressure upstream investment, limiting the pace of production growth.

Global liquid fuels consumption increased by an estimated 1.1 million b/d in 2025, and EIA forecasts it will increase by 1.2 million b/d this year and by 1.3 million b/d in 2027. Global liquid fuels consumption growth is driven almost entirely by non-OECD countries, which together grow by 1.1 million b/d in 2026 and 1.2 million b/d in 2027. OECD consumption is expected to grow slightly through 2027.

US natural gas

In contrast to crude, EIA expects US natural gas prices to remain firmer through 2026 and 2027, reflecting tightening fundamentals, increased LNG export demand, and higher seasonal volatility.

EIA reported Henry Hub spot prices averaged $7.72/MMbtu in January 2026, sharply higher than December levels amid cold weather-driven demand and supply disruptions. The agency now forecasts Henry Hub prices will average $4.31/MMbtu in 2026 and $4.38/MMbtu in 2027.

US dry natural gas production in EIA’s forecast grows by 2% in 2026 or about 2 bcfd and then by 1%, or 1 bcfd, in 2027. EIA now forecasts the US will produce 110 bcfd of dry natural gas this year and more than 111 bcfd next year. Both of those forecasts are more than 1 bcfd higher than in last month’s STEO.

“During second-half 2026, as new pipeline capacity comes online in the Permian, we expect production to ramp up. In 2027, we expect higher gas-oil ratios in the Permian region and increased drilling following higher natural gas prices in the Haynesville region to contribute to overall growth,” said EIA.

Mealtime, as a result of colder weather and more demand, EIA now expects natural gas inventories will end this withdrawal season 1% above the 5-year average, whereas last month, the agency forecasted stocks would end the season 10% above average.