By Amara Osei

The U.S. Energy Information Administration (EIA) raised its 2027 U.S. retail fuel forecasts to $5.03 a gallon for diesel and $3.73 for gasoline, citing continued supply constraints in global petroleum product markets. The Tuesday revision in EIA's November Short-Term Energy Outlook lifted diesel 12% from last month's forecast of $4.49 a gallon and gasoline 5% from $3.56 a gallon.

Both revised averages remain below EIA's 2026 forecasts of $5.25 a gallon for diesel and $3.89 for gasoline. The monthly revisions therefore raise the 2027 forecast without reversing EIA's expected annual easing from 2026.

Why did EIA raise the 2027 forecasts?

EIA said it assumes global petroleum product markets “will face supply constraints through the end of 2027.” Those conditions support wider crack spreads (a measure of refiners' margins) and encourage elevated U.S. refinery operations, the agency said.

These assumptions underpin EIA's combination of a higher monthly forecast and lower annual averages than 2026. The agency can therefore project easing from 2026 while retaining tighter product-market conditions through the end of 2027.

How does the crude path compare?

EIA expects the Brent crude oil spot price to remain near $100 a barrel for the rest of 2026. It forecasts a gradual decline to an average of $77 a barrel in the fourth quarter of 2027 as depleted global inventories build.

The forecast assumes most Middle East production outside Iran returns to pre-conflict averages by mid-2027. Under EIA's framework, scarcity supports refining margins and elevated U.S. refinery operations, while lower Brent prices and rebuilt inventories provide a separate crude-market path.

The two mechanisms operate on different horizons: product constraints run through 2027, while the Brent decline reaches an average of $77 in the fourth quarter. EIA therefore combines a lower crude benchmark after 2026 with continuing petroleum-product constraints.

What tightened supply in October?

Crude prices rose for a third consecutive month in October, according to EIA, as falling global inventories and attacks on oil tankers in the Persian Gulf tightened supply. Constrained shipping capacity and higher transportation costs compounded the pressure.

U.S. commercial crude oil inventories fell to 410 million barrels at the end of October, the lowest end-October level since 2014. Bloomberg reported that EIA expects worldwide use of liquid fuels to shrink by 2 million barrels per day (bpd) in 2026. The agency expects the shortfall to be made up in 2027.

The demand adjustment does not extend beyond 2026 in EIA's model because the agency expects the full 2 million bpd shortfall to be recovered during 2027. That recovery offsets part of the demand reduction carried into the first forecast year.

What did the IEA warn?

The outlook follows an October warning from the International Energy Agency (IEA) that global diesel markets would remain under strain well into 2027. In that October assessment, the IEA said depleted inventories were “unlikely to be replenished before the second half of next year.”

On Oct. 15, the IEA's Governing Board agreed to accelerate the release of its remaining oil stocks, including more than 20 million barrels of diesel. The board cited continued tightness in oil markets as the reason for accelerating the release. The IEA's stock action and inventory warning therefore point in the same direction as EIA's November product-market assumption.

What can still change?

EIA finalized its model inputs on Nov. 5, and the forecast does not specifically account for market events after that day. The Nov. 5 cutoff means the published figures do not specifically reflect market events on any later date.

Its central assumptions are supply constraints through end-2027, Middle East production normalization by mid-2027, and a 2026 demand contraction followed by a 2027 make-up. For EIA's 2027 retail averages, the pivotal assumption remains whether global petroleum-product supply stays constrained through year-end.