Hormuz closure and related production outages are key drivers in EIA’s latest forecast

"Our petroleum forecasts are highly contingent on the interaction of three variables," EIA Administrator Tristan Abbey said. "First, to even run our model we have to make an assumption about the duration of the Strait of Hormuz closure. Second, we know that the closure is forcing production to shut in, but we can only estimate these outages. Third, just as we had never before seen the strait close, we have never seen it reopen. What exactly that looks like remains to be seen. Full restoration of flows will take months. Our modelling indicates that fuel prices will continue to rise until these variables resolve."

Key takeaways from the April STEO are below.

Global oil production

Oil flows through the Strait of Hormuz continue to be limited causing oil storage to fill quickly in countries that rely on the waterway for exports. As a result, the EIA estimates that Iraq, Saudi Arabia, Kuwait, UAE, Qatar, and Bahrain collectively shut in 7.5 million bpd of crude oil production in March. EIA assesses that production shut-ins will rise to 9.1 million bpd in April. In this outlook, it is assumed that the conflict does not persist past April and that traffic through the Strait of Hormuz gradually resumes. Under those assumptions, production shut-ins are expected to fall to 6.7 million bpd in May and return close to pre-conflict levels in late 2026.

Crude oil price forecast

The Brent crude oil spot price averaged $103/bbl in March, and EIA expects it to peak in 2Q26 at US$115/bbl before easing as production shut-ins slowly abate. EIA maintains a risk premium on crude oil prices throughout the forecast period as it expects uncertainty around future supply disruptions to keep prices above pre-conflict levels. It forecasts the Brent crude oil price will fall below $90/bbl in 4Q26 and average $76/bbl in 2027. This price forecast is highly dependent on our assumptions of both the duration of conflict in the Middle East and resulting outages in oil production.

Retail gasoline and diesel prices

Higher crude oil prices have led to higher gasoline and diesel prices, with diesel remaining particularly elevated due to tight global supplies and US inventories remaining below the five-year (2021 - 2025) average. It forecasts retail gasoline prices to peak at a monthly average of close to US$4.30/gal. in April and average more than $3.70/gal. this year. Diesel prices peak at more than $5.80/gal. in April and average $4.80/gal in 2026.

LNG exports

The reduction in flows of LNG exports through the Strait of Hormuz has reduced global LNG supply and sharply increased the spread between the US benchmark Henry Hub spot price and European and Asian import prices. US LNG export facilities are running at near-peak capacity, exporting almost 18 billion ft³/d of natural gas in March, close to the record set in December 2025. With capacity utilisation high, only very limited flexibility exists to increase exports. That flexibility comes from deferred maintenance, the pace of new project ramp-ups, and recent export authorisation agreements.

Natural gas inventories

Natural gas inventories ended the 2025 - 2026 withdrawal season (November - March) 3% above the five-year average, at just over 1900 billion ft³. On the back of natural gas production growth and very limited capacity to increase exports, the EIA expects natural gas storage injections to outpace the five-year average and end October at 4015 billion ft3, 6% more than the five-year average.

Read the article online at: https://www.tanksterminals.com/special-reports/08042026/hormuz-closure-and-related-production-outages-are-key-drivers-in-eias-latest-forecast/