1. The EIA path, quarter by quarter
The EIA does not see the oil price crashing but eroding over six quarters: $104.69 in the fourth quarter of 2026, then $94.90, $87.00, $80.03 and $73.94 in the four quarters of 2027 (STEO, 6 October 2026). The 2027 average of $83.74 is about $13 below 2026 ($96.32) and about $22 below the price on 13 October 2026. WTI follows four dollars lower, at $79.74 for 2027.
| Quarter | Brent | WTI |
|---|---|---|
| Q3 2026 | $95.95 | $87.02 |
| Q4 2026 | $104.69 | $97.00 |
| Q1 2027 | $94.90 | $90.90 |
| Q2 2027 | $87.00 | $83.00 |
| Q3 2027 | $80.03 | $76.03 |
| Q4 2027 | $73.94 | $69.94 |
| 2026 average | $96.32 | $88.21 |
| 2027 average | $83.74 | $79.74 |
For comparison, the crisis year so far: $118.35 on 31 March 2026 at the height of the Hormuz closure, $71.57 on 1 July after the June deal, $96.78 on 24 July after its collapse (Wikipedia), $104.33 on 18 September (Fortune) and $105.70 on 13 October, 07:02 CEST (HeizOel24). The October outlook has caught up with the September rally: the fourth quarter of 2026 now stands at $104.69, $14 above the September figure ($90.66), and the 2027 average at $83.74, $10 higher ($73.74); it was the third upward revision in a row. Brent spot averaged $114 in September, $23 above August, with a daily high of $131 on 15 September (EIA via Rigzone, 8 October).
2. Why the price is supposed to fall: surplus, Hormuz, US output
The forecast rests on three assumptions. First the balance: in 2026 the world consumes 1.34 million barrels a day more than it produces; in 2027 it produces 4.91 million barrels a day more than it consumes (STEO, table 3a, 6 October 2026). Global inventories fell by 1.9 million barrels a day in the third quarter of 2026 and are expected to fall another 0.7 million a day in the fourth before they refill in 2027 (EIA). Second the Gulf: the EIA puts shut-ins at 4.8 million barrels a day in September, after 5.8 million in August and a peak of 10.9 million in May, assumes 4.5 million in the fourth quarter of 2026 and expects most of the region's production to return to pre-conflict levels by the end of the second quarter of 2027; convoys through Hormuz, bypass pipelines and ship-to-ship transfers are expected to raise exports from the region step by step. Third the United States: crude output rises from 13.87 to 14.30 million barrels a day (STEO, table 4a).
Goldman Sachs reached similar numbers in June by a different route: $75 for 2027 as a long-term equilibrium, supported by more supply from the US, Brazil, Guyana, Venezuela and the UAE and by demand weakness of which about ten per cent persists after the conflict; the bank put the 2027 surplus at 3.2 million barrels a day (Yahoo Finance, 13 and 21 June 2026). Note that these figures predate the ceasefire collapse of 8 July; we had no more recent Goldman forecast on 13 October. Why surpluses push prices down is explained in our glossary entry on contango and backwardation.
3. What could upset the forecast, up and down
Upside: the whole forecast hangs on Hormuz. If the strait stays constrained beyond the second quarter of 2027, the surplus disappears; the market showed in March 2026 that it then prices $118. Add Russia's refineries under drone attack (export ban until the end of October, Hydrocarbon Processing) and Saudi Arabia's East-West pipeline, which has only partly resumed flows since 22 September after the September attacks; before them it carried more than 5 million barrels a day of exports via Yanbu (EIA STEO, 6 October).
Downside: a fast reopening. Iran had offered on 22 September to reopen the strait within seven days (Reuters via Israel Hayom); President Trump rejected the plan on 26 September (CBS News), and on 11 October Iran called the US reply to its conditions insufficient (Reuters via Jerusalem Post). In June Goldman valued a one-month-earlier normalisation at about $10 less for late 2026 and $5 for 2027. If a reopening came in 2026 rather than in spring 2027, the EIA path would be too high. The three scenarios are on Hormuz reopening: what happens to fuel prices. And beyond geopolitics, Goldman's demand weakness, China's electric cars and US output all point the same way in 2027: down.
4. What $84 means for heating oil, diesel and petrol
The EIA translates its own path into consumer prices: US heating oil $5.81 a gallon in the fourth quarter of 2026 and $4.44 on average in 2027, diesel $5.81 and $4.49, petrol $4.15 and $3.56 (STEO, 6 October). Diesel and heating oil therefore fall more slowly than crude, because distillate stocks are tight: on the US East Coast they were 32% below the five-year average in September (EIA); the gap between diesel and petrol remains unusually wide at $0.93 a gallon on average in 2027 (see Why is diesel more expensive than petrol).
For Europe there is no official translation, but a rule of thumb from our methodology: ten dollars a barrel of Brent is about 5.5 euro cents a litre before tax at a rate of 1.14 dollars per euro (see pass-through effect). A fall from $106 to $84 would be worth around 12 cents a litre of heating oil if refining margins and freight follow, which is exactly the open question for 2027. US households that must get through this winter on heating oil find the decision rule on Heating oil: buy now or wait? and the winter outlook on Heating oil price predictions.
See in a minute what Brent at $84, $105 or $118 means for your household.
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