At the start of 2026 almost every major forecaster expected crude oil to get cheaper. Global production was growing faster than demand, inventories were building, and the U.S. Energy Information Administration expected Brent to average under $60 a barrel for the year. Within days of this outlook being written the Iran war began and the Strait of Hormuz was effectively closed — turning a forecast glut into the largest supply disruption on record. This page records what the pre-war consensus was, and how far reality diverged.
The Pre-War Consensus
In its February 10, 2026 Short-Term Energy Outlook, the EIA forecast Brent averaging about $58 a barrel in 2026 (falling from about $64 in the first quarter to $54 in the fourth) and $53 in 2027, after averaging $69 in 2025. Its reasoning: "strong growth in global oil production will result in high global oil inventory builds over the forecast, causing crude oil prices to fall," with OPEC+ decisions and Chinese strategic stockpiling — about 1 million b/d in 2026 — limiting the decline. The International Energy Agency likewise projected a large global supply surplus for 2026.
WTI traded accordingly. It settled around $59 in mid-January 2026 and drifted up to about $67 by February 27 as US-Iran tensions grew — a risk premium layered on top of weak fundamentals.
Why the Glut Thesis Looked Solid
- Non-OPEC+ growth: rising output from the United States, Brazil, Guyana and Canada.
- OPEC+ unwinding cuts: the group had been returning previously withheld barrels to the market since 2025.
- Soft demand growth: slower Chinese oil demand growth as electric vehicles and LNG trucks spread.
- US shale efficiency: Permian output per well kept improving even as the rig count fell.
What Changed
The US-Israel war with Iran began on February 28, 2026, and tanker traffic through the Strait of Hormuz — normally about 20 million b/d of oil, a fifth of world consumption — collapsed. WTI rose more than 35% in the first week of March, its biggest weekly gain on record, and posted a record $38 intraday range on March 9 (details). OPEC+ policy, inventories and demand forecasts became secondary to the strait.
By September the EIA's outlook had flipped: its September 9, 2026 STEO forecast Brent averaging about $91 in 2026 and $74 in 2027, with some Middle East export constraints expected to persist until the second quarter of 2027. It still expected US crude production to rise to about 13.8 million b/d in 2026 and 14.3 million b/d in 2027.
Lessons for Reading Oil Forecasts
Annual price forecasts are conditional on the absence of major supply shocks, and they are revised every month. They are useful for understanding the balance of supply and demand, but they say little about tail risks such as a chokepoint closure. That is why traders watch the futures curve, options-implied volatility and the WTI-Brent spread alongside forecasts — and why the underlying oversupply story may return once Gulf exports normalize. For the long-run context, see the WTI price history.