The EIA Just Raised Its Oil Price Forecast for the Fourth Quarter. It Now Expects Brent to be Above $100.

The Energy Information Administration hiked its forecast of oil prices for the fourth quarter of the year as flows remain tight due to ongoing conflicts around the war and particularly in the Middle East.

In a new overview, the EIA said it estimates that oil flows in the region will remain constrained in the last quarter of the year. “We now forecast the Brent crude oil spot price will average $105 per barrel (b) in 4Q26, $14/b higher than in last month’s” forecast, the document said.

It specified that attacks against Saudi Arabia’s East-West pipeline in September “highlight the potential for continued volatility in physical oil flows and oil prices amid ongoing withdrawals of oil inventories globally.” The country this week managed to resume partial flows.

The document went on to note that “additional upward pressure on crude oil prices stems from extreme tightness in diesel markets that raises demand for crude oil in order for refiners to meet diesel demand. We expect the Brent spot price will fall to an average of $84/b next year.”

However, it claimed that flows are likely to start recovering and improve the outlook for the next year, adding that “regional shut-in production in September was the lowest since the onset of hostilities.”

“Despite ongoing constraints, we assume that a combination of convoys through the Strait of Hormuz and workarounds to oil exports from the Middle East, including bypass routes and increased use of ship-to-ship transfers, will lead to production and exports from the region generally increasing through the forecast period,” the EIA added.

Saudi Aramco CEO Amin Nasser said this week that even if flows recover, the replenishment of oil inventories could take up two years, potentially keeping prices higher for longer.

Speaking at the Energy Intelligence conference in London, Nasser also warned that the squeeze on supplies could also worsen still.

“Replenishing inventories while meeting demand could take up to two years,” Nasser said. He went on to note that about 3 billion barrels of oil have been lost since the war began and 1 billion barrels have been released from strategic stockpiles.

At the same time, refining infrastructure across the Middle East has been damaged, restricting the region’s ability to turn crude oil into the fuels consumers and businesses actually need.