Highlights
- Crude oil price movements. The Brent crude oil spot price has risen sharply following the onset of military action in the Middle East. Brent settled at $94 per barrel (b) on March 9, up about 50% from the beginning of the year and the highest since September 2023. Crude oil prices have risen as petroleum shipments through the Strait of Hormuz have fallen, and some Middle East oil production has been shut in.
- Middle East oil production. We make the assumption in our modeling that the effective closure of the Strait of Hormuz will cause oil production in the Middle East to fall further in the coming weeks. We assume this shut-in production will gradually ease as transit through the Strait resumes.
- Crude oil price forecast. We forecast the Brent crude oil price will remain above $95/b over the next two months, before falling below $80/b in the third quarter of 2026 and around $70/b by the end of the year. We expect prices to average $64/b in 2027. This price forecast is highly dependent on our modeled assumptions of both the duration of conflict in the Middle East and resulting outages in oil production.
- U.S. crude oil production. Higher oil prices lead to more U.S. crude oil production in our forecast. We expect U.S. crude oil production will average 13.6 million barrels per day (b/d) in 2026 and rise to 13.8 million b/d in 2027. Our 2027 forecast is 0.5 million b/d higher than last month's forecast.
- Natural gas prices. Although reduced liquefied natural gas (LNG) flows through the Strait of Hormuz have caused the price of natural gas in Europe and Asia to increase, we expect U.S. natural gas prices to be relatively unaffected by this development. In our forecast, the Henry Hub spot price averages about $3.80 per million British thermal units (MMBtu) in 2026, or 13% less than our forecast last month. Prices in the early part of our forecast are lower because of milder-than-forecast temperatures in February that left more natural gas in storage than we expected. The Henry Hub spot price averages nearly $3.90/MMBtu in 2027, 12% lower than our forecast last month. Lower prices in 2027 mostly reflect more associated natural gas production as a result of the recent increase in oil prices and the related increase in production later in the forecast.
- Natural gas production and inventories. Higher crude oil production results in more associated natural gas production. We expect marketed natural gas production to average 121 billion cubic feet per day (Bcf/d) this year, up 2% from 2025, and 124 Bcf/d in 2027, an additional 3% and almost 2 Bcf/d higher than last month's outlook. U.S. natural gas inventories are expected to end the withdrawal season in March around 1,840 billion cubic feet, which is near the five-year average (2021-2025). Withdrawals slowed in February, following historic withdrawals in January related to extreme cold weather around Winter Storm Fern.
- Electricity. U.S. electricity generation has been increasing by an average of 2% per year since 2021 to meet growing electricity demand following a period of flat demand growth between 2010 and 2019. We expect U.S. electricity generation will grow by 1.2% in 2026 and by 3.1% in 2027 led by demand growth in the Electric Reliability Council of Texas (ERCOT) region. In 2026, U.S. coal generation declines by 7% in our forecast as generation from renewable sources increases and the electric power sector retires about 4% of its coal-fired generating capacity.
This month's forecast also reflects the implementation of an updated U.S. crude oil and natural gas production modeling system that improves analytical capabilities and forecast accuracy.
The full March 2026 Short-Term Energy Outlook is available on the EIA website.
The product described in this press release was prepared by the U.S. Energy Information Administration (EIA), the statistical and analytical agency within the U.S. Department of Energy. By law, EIA's data, analysis, and forecasts are independent of approval by any other officer or employee of the U.S. government. The views in the product and this press release therefore should not be construed as representing those of the U.S. Department of Energy or other federal agencies.
EIA Program Contact: Tim Hess, STEO@eia.gov
EIA Press Contact: Morgan Butterfield, EIAMedia@eia.gov
