The EIA's March Short-Term Energy Outlook (STEO) includes one of the largest month-to-month revisions to crude market expectations in recent years, driven by the outbreak of war involving the US, Israel, and Iran and the resulting disruption to tanker traffic through the Strait of Hormuz. With shipping through the chokepoint effectively halted, the EIA sharply raised its near-term oil price outlook while reducing the expected scale of global inventory builds in 2026.
The most visible change was to prices. The EIA now forecasts WTI crude to average $73.61/bbl in 2026, up from $53.42/bbl in the February STEO, and $60.81/bbl in 2027, compared with $49.34/bbl previously. Those higher prices reflect the EIA’s assumption that the effective closure of Hormuz temporarily removes meaningful volumes from the market. Even though the waterway has not been physically blocked, the threat of attacks and the loss of shipping insurance have drastically reduced tanker traffic. As exports slow, crude inventories in Gulf producers are expected to build locally, forcing some producers to shut in output until flows resume, with the agency expecting those shut-ins to peak in early April.
Despite the disruption, the EIA does not assume a permanent loss of supply. Instead, the report treats the conflict as a temporary logistical shock rather than a structural reduction in global production capacity. While the STEO does not specify when transit through the Strait of Hormuz will normalize, its forecast assumes that shipping activity gradually resumes, allowing Middle Eastern production to recover and global inventories to begin rebuilding later in the outlook period.
That assumption explains why the agency still sees the global market returning to surplus. The EIA revised its 2026 global inventory build forecast down to 1.9 MMbbl/d, from 3.1 MMbbl/d previously, reflecting tighter conditions this year. However, it raised the 2027 build forecast to 3.0 million b/d, signaling a return to oversupply once Middle Eastern flows stabilize.
Taken together, the March STEO outlines a two-phase oil market outlook. A near-term price spike is driven by disruptions in the Strait of Hormuz, followed by a gradual return to surplus as exports normalize and higher prices encourage additional supply.