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The US Energy Information Administration (EIA) projects that Brent crude prices will climb to $115 per barrel in the second quarter of 2026, up from an average of $103 per barrel in March, reflecting a sharp tightening in global supply amid Middle East conflict and Gulf production disruptions.

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According to the EIA’s April Short-Term Energy Outlook, global oil markets have entered a period of acute volatility as the US-Iran war constrains flows through the Strait of Hormuz, a critical chokepoint that carries nearly 20% of the world’s oil supply. Production shut-ins among major Gulf producers—including Saudi Arabia, Iraq, Kuwait, and the UAE—averaged 7.5 million barrels per day (b/d) in March and are expected to peak at 9.1 million b/d in April. The agency projects that if the conflict does not persist past April, output will gradually return to near pre-conflict levels by late 2026.

The supply shock has rapidly turned markets from anticipated oversupply to a significant deficit, with global inventories drawing sharply during the second quarter. Even assuming a short-lived conflict, the EIA warns that supply chains will take months to normalize, keeping a geopolitical risk premium embedded in prices through late 2026. Brent prices are forecast to fall below $90 per barrel in the fourth quarter of 2026 and average $76 per barrel in 2027, about $23 higher than previously projected in February.

Global demand growth has also been revised sharply lower, now expected to increase by just 0.6 million b/d in 2026, down from 1.2 million b/d, as high prices and supply shortages dampen consumption, particularly in Asia. The disruption has widened the Brent-WTI spread, which averaged $12 per barrel in March and is expected to peak near $15 per barrel in April, reflecting Brent’s greater exposure to international markets while US inventories and strategic releases moderate domestic price increases.

The spike in crude prices is feeding directly into refined products. US retail gasoline prices are projected to approach $4.30 per gallon in April, averaging $3.70 for the year, while diesel prices could exceed $5.80 per gallon in April and average $4.80 in 2026.

Natural gas markets are also under pressure. Reduced LNG flows from the Middle East have pushed US export facilities near full capacity, while supply disruptions have widened global price spreads. EIA estimates US LNG exports reached 17.9 billion cubic feet per day (bcfd) in March, up 8% from January forecasts and the second-highest monthly volume on record. Full-year 2026 exports are projected at 17.0 bcfd, rising to 18.6 bcfd in 2027, both above the previous record of 15.1 bcfd set in 2025.

Further tightening of LNG supply stems from damage to Qatar’s Ras Laffan export plant, which represents about 17% of the country’s liquefaction capacity. QatarEnergy estimates repairs could take up to five years, keeping international gas prices under pressure.

The EIA outlook underscores the far-reaching impact of geopolitical tensions on energy markets, highlighting tight crude and gas supplies, rising fuel costs, and continued volatility through 2026.