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EIA predicts lower oil prices as global inventory growth extends into 2026, 2027
Ziggy Ojiegbe
Brent crude oil prices are expected to average $56 per barrel in 2026 and $54 per barrel in 2027, as rising global oil inventories continue to weigh on prices, according to the US Energy Information Administration (EIA).
In its January 2026 Short-Term Energy Outlook (STEO), the EIA said the projected price levels would be well below the 2025 average of $69 per barrel.
Global crude oil prices weakened through the second half of 2025, with Brent spot prices averaging $63 per barrel in December, about $11 lower than in December 2024. Prices were flat or declined in every month during the period, as growing crude production and rising volumes of oil in floating storage outweighed concerns over potential export disruptions linked to geopolitical tensions in Russia and Venezuela.
The EIA expects global liquid fuels production to increase by 1.4 million barrels per day (b/d) in 2026 and by a further 0.5 million b/d in 2027. Production growth in 2026 will be driven mainly by OPEC+ crude output, while growth in 2027 is expected to come from non-OPEC+ producers, particularly in South America. The outlook assumes that existing US sanctions on Venezuela remain in place through 2027.
Global liquid fuels consumption rose by an estimated 1.2 million b/d in 2025 and is forecast to grow by 1.1 million b/d in 2026 and 1.3 million b/d in 2027. The EIA said demand growth is expected to accelerate in 2027 as global economic activity improves. Oxford Economics forecasts global GDP growth of 3.1% in 2026 and 3.3% in 2027.
After reaching an annual peak of 13.6 million b/d in 2025, US crude oil production is forecast to average roughly the same level in 2026. However, the EIA expects output to decline to about 13.3 million b/d in 2027, a 2% drop from the 2026 forecast.
The agency said sustained lower oil prices are likely to slow drilling activity, with productivity gains insufficient to offset the decline. West Texas Intermediate (WTI) crude prices are projected to average $52 per barrel in 2026 and $50 per barrel in 2027, down from an average of $65 per barrel in 2025.
US natural gas prices are expected to remain relatively flat in 2026 before rising sharply in 2027 as market conditions tighten. The EIA forecasts the Henry Hub spot price will average just under $3.50 per million British thermal units (MMBtu) in 2026, about 2% lower than in 2025, before climbing by 33% in 2027 to nearly $4.60/MMBtu.
According to the EIA, the projected price increase in 2027 reflects demand growth outpacing supply, driven by expanding US LNG export capacity and rising natural gas consumption in the power sector. These factors are expected to draw down storage inventories below the five-year average, placing upward pressure on prices.
