The U.S. Energy Information Administration (EIA) upgraded its 2026 oil price forecasts on Wednesday, citing substantial global stock depletion from the Iran war. President Donald Trump stated gasoline prices would not fall until after the midterm elections.

The EIA reported an estimated 400 million barrels of global oil stocks depleted this year alone. Middle East production shut-ins rose to 6.7 million bpd in August from 5 million bpd in July, driven by attacks on Saudi exports through Bab el-Mandeb and reduced departures from Yanbu port.

Revised Price Forecasts

The agency now projects Brent crude to average $91 a barrel in the spot market in 2026, nearly 5% higher than previous estimates. U.S. West Texas Intermediate (WTI) crude is projected to average $84.65 a barrel. The EIA expects Brent to gradually fall to an average of $74/b in 2027 as production rises and inventories rebuild.

Market Reaction and Analyst Views

Goldman Sachs raised its oil-price forecasts, warning Brent could surge above $120 a barrel if Persian Gulf disruptions persist. The firm noted stable OECD inventories but highlighted prolonged output losses as a major risk.

Brent crude futures expiring in October traded 4.39% higher at $105.65 per barrel. WTI crude futures for October were up 3.48% at $99.39 per barrel. These levels exceed the EIA’s report, finalized on September 3, which preceded recent escalations that pushed prices above $100.

Political Context

Trump, ahead of the GOP convention in Dallas, told reporters oil prices would start "tumbling downward" post-midterms but added relief could take "a little bit longer." He reiterated his goal of getting gasoline below $2 a gallon, but not until after the elections.

What the Numbers Show

The divergence between official forecasts and current market pricing is stark. While the EIA forecasts an average of $91/bbl for 2026, current October futures trade at $105.65/bbl, reflecting immediate supply shock fears not fully captured in the pre-escalation report. Additionally, the jump in shut-ins from 5 million to 6.7 million bpd signals intensifying physical disruption, supporting Goldman Sachs’ bearish view on supply stability.

Economist Peter Schiff warned that oil prices could rise significantly in the coming years, arguing that the Trump administration's drawdown of the Strategic Petroleum Reserve leaves the US with less protection against future supply shocks.

Schiff posted on X on Wednesday, highlighting that oil is over $95 per barrel despite efforts to suppress prices. He questioned the market condition by the 2028 Presidential Elections, noting the risks if the SPR remains empty for over a year.

Oil and Gas Prices

West Texas Intermediate (WTI) futures ending in October traded at $95.66, while Brent crude futures ending in November exceeded $100 to reach $100.56 at press time. The United States Oil Fund (NYSE: USO) fell 1.16% to $148.23 during overnight trading on Wednesday.

Data from the American Automobile Association showed the national average price of gas was $4.2245/gallon on Wednesday. Diesel averaged $5.9424/gallon, while premium gas stood at $5.1200/gallon.

Iran Tensions

Amid escalating tensions, the Islamic Revolutionary Guard Corps claimed it struck two US vessels and multiple tankers after the US Central Command said it had struck Iranian government oil tankers. CENTCOM denied the IRGC's claim, stating none of its vessels were hit.

The administration reportedly adopted a "tanker for tanker" policy to deter Iranian strikes in the Strait of Hormuz. Schiff also criticized Trump's comments about the war in Iran ending immediately after the midterms, calling it a lie.