Amid the ongoing Iran war and rapidly diminishing global oil reserves, the U.S. Energy Information Administration (EIA) has upgraded its oil price forecasts for this year.

On Wednesday, the EIA stated that the war has resulted in a substantial decrease in global oil stocks, with an estimated 400 million barrels depleted this year alone. The EIA expects further reductions by the end of the year due to the continued absence of significant Middle Eastern output and export volumes.

Middle East oil production shut-ins jumped to 6.7 million bpd in August from 5 million bpd in July, driven partly by attacks on Saudi oil exports through Bab el-Mandeb and fewer ship departures from Yanbu port, the EIA's Short-Term Energy Outlook report stated.

The agency now expects global benchmark Brent crude prices to average around $91 a barrel in the spot market in 2026, nearly 5% higher than its previous forecast. U.S. West Texas Intermediate crude prices are also projected to average $84.65 a barrel, reflecting a similar percentage increase from earlier estimates.

"As oil production rises into next year, and as inventories rebuild, we expect the Brent spot price to gradually fall to an average of $74/b in 2027," the EIA stated.

The EIA warned that the recovery of oil flows from the Middle East, expected to increase in the coming months, is contingent on the conflict's progress.

Notably, the report was finalized on September 3, before the recent escalation of tensions between the U.S. and Iran, which saw Brent crude oil prices exceed $100 a barrel on Wednesday due to attacks on shipping and energy infrastructure.

Energy Market Pressure Continues

On Monday, Goldman Sachs raised its oil-price forecasts, warning Brent crude could surge above $120 a barrel if Persian Gulf supply disruptions persist, with prolonged output losses posing a major risk to global markets.

The firm sees the oil price increase as relatively moderate, citing stable OECD inventories and continued supply flows through the Strait of Hormuz and alternative pipelines. It believes alarmist forecasts may be overstated, with global stocks still above minimum levels.

Meanwhile, President Donald Trump, ahead of the GOP convention in Dallas on Wednesday, told reporters that oil prices would start "tumbling downward" post the midterm election, but added that relief could take "a little bit longer than the midterms."

"I think for gasoline, we'll get them below $2 a gallon. But not until after the midterms," the President said.

At the time of writing, Brent crude oil futures expiring in October were trading 4.39% higher at $105.65 per barrel, while WTI crude futures expiring in October were trading 3.48% higher at $99.39 per barrel.