EIA Had Seen Prices Easing — Before the Truce Collapsed
Monday, 20 July 2026
By Atlantic Digest Oil & Gas Desk
The United States Energy Information Administration (EIA) has acknowledged that its earlier projections for easing global energy prices were based on assumptions that have since been overtaken by renewed conflict between the United States and Iran.
In its July Short-Term Energy Outlook (STEO), released on July 7, 2026, during a brief period of calm following a ceasefire agreement, the EIA projected that global oil production would steadily recover and that crude supply and international trade would return to near pre-conflict levels before the end of the year.
The agency also forecast that most oil production disrupted by the conflict would be restored by early 2027, supporting a more stable global energy market. Based on those expectations, it predicted that average retail gasoline prices in the United States would decline to about $3.60 per gallon during the second half of 2026, compared with the $4.48 per gallon recorded in May.
The report further anticipated that record natural gas production in the United States would keep Henry Hub benchmark prices relatively stable at around $3.70 per million British thermal units (MMBtu) throughout the year.
However, those projections were founded on expectations that the ceasefire between Washington and Tehran would hold and that commercial shipping through the Strait of Hormuz would remain uninterrupted. Those assumptions have since been undermined by renewed military hostilities, fresh U.S. airstrikes on Iran and continued disruptions to one of the world’s most important oil transit routes.
The collapse of the truce has significantly altered the outlook for global energy markets. Analysts say renewed restrictions on shipping through the Strait of Hormuz have shifted the balance of risk from abundant supply to potential shortages, raising concerns over further increases in crude oil prices and fuel costs worldwide.
Despite the deteriorating security situation, the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) are still considering plans to gradually increase production in response to long-term demand expectations. At the same time, several major Wall Street financial institutions continue to forecast a global oil surplus in 2026 under scenarios that assume no further disruption to supply.
Energy experts caution, however, that those forecasts could quickly change if military tensions continue to escalate. They note that any prolonged interruption to Gulf oil exports would likely tighten global supplies, increase market volatility and place additional pressure on economies already facing inflationary challenges.
With geopolitical uncertainty once again dominating the energy market, the EIA’s earlier outlook serves as a reminder of how rapidly global supply and price expectations can change when conflict threatens critical international shipping routes and energy infrastructure.
