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Overview
The U.S. Energy Information Administration’s June 2026 Short-Term Energy Outlook (STEO) presents a sharply revised energy market picture shaped by geopolitical disruption, volatile oil supply, higher petroleum product prices, stronger U.S. energy exports, and rising summer electricity demand.
The central assumption in the June report is that the Strait of Hormuz remains effectively closed in the near term, with oil flows gradually resuming in the third quarter of 2026. However, the EIA does not expect traffic and production patterns to return fully to pre-conflict levels until early 2027. This marks a major difference from the May 2026 STEO, which assumed the Strait would reopen sooner and that supply recovery would begin earlier.
The June outlook shows that Middle East oil production disruptions have deepened. The EIA estimates that more than 11 million barrels per day of crude oil production was shut in during May compared with pre-conflict levels. As a result, global oil inventories are expected to draw sharply, with declines of 6.3 million barrels per day in 2Q26 and 7.6 million barrels per day in 3Q26.
The report also revises global oil demand lower. The EIA now expects world oil consumption to decline by 1.1 million barrels per day in 2026, compared with its May forecast for a 0.2 million barrel-per-day increase. This is one of the most important changes in the June outlook because it shows that high fuel prices, reduced availability, and government demand-management measures are starting to weigh heavily on consumption.
At the same time, the June STEO raises the outlook for Henry Hub natural gas prices, slightly increases U.S. crude oil production expectations, projects continued growth in U.S. LNG exports, and highlights a stronger role for renewable electricity generation during the summer demand season.
Key EIA June 2026 Energy Market Forecasts
The EIA forecasts Brent crude oil to average $95 per barrel in 2026, before easing to $79 per barrel in 2027. The agency expects Brent to remain near $105 per barrel in June and July 2026 because global inventories continue to fall while the Strait of Hormuz remains largely closed.
U.S. retail gasoline prices are forecast to average $3.90 per gallon in 2026, slightly above the May forecast of $3.88 per gallon. The 2027 gasoline forecast is also higher, at $3.64 per gallon, compared with $3.62 per gallon in the May outlook.
U.S. crude oil production is expected to rise from 13.6 million barrels per day in 2025 to 13.7 million barrels per day in 2026 and 14.2 million barrels per day in 2027. This is a small but important upward revision from May, when the EIA expected 2026 production to remain at 13.6 million barrels per day.
For natural gas, the EIA now expects the Henry Hub spot price to average $3.60 per million British thermal units in 2026 and $3.46/MMBtu in 2027. This is higher than the May forecast of $3.50/MMBtu in 2026 and $3.18/MMBtu in 2027.
U.S. LNG gross exports are projected to rise from 15 billion cubic feet per day in 2025 to 17 Bcf/d in 2026 and 19 Bcf/d in 2027, supported by new export capacity and strong international demand.
In electricity markets, the EIA expects natural gas to remain the largest source of U.S. power generation, holding a 40% share in 2025, 2026 and 2027. Coal’s share falls from 17% in 2025 to 16% in 2026 and 15% in 2027, while solar rises from 7% in 2025 to 8% in 2026 and 9% in 2027.
Global Oil Market Outlook: Strait of Hormuz Drives the Forecast
The June 2026 STEO is dominated by the impact of the Strait of Hormuz disruption. The Strait is one of the world’s most important oil transit routes, and its prolonged closure has reduced shipping traffic, forced Middle Eastern producers to shut in production, and caused large global inventory draws.
Compared with the May report, the June outlook assumes a longer disruption and slower recovery. In May, the EIA expected shipping traffic to begin recovering in June 2026. In the June report, the agency now expects flows to resume only gradually in 3Q26, with full normalization delayed until early 2027.
This change has major consequences for the global oil balance. The EIA now expects global oil inventories to fall much more sharply than previously forecast. The June outlook projects inventory draws of 6.3 million barrels per day in 2Q26 and 7.6 million barrels per day in 3Q26, pushing OECD inventories to their lowest levels since 2003.
Despite these severe supply disruptions, Brent crude oil prices fell in May because of weaker oil demand and reports that the United States and Iran were close to an agreement that could extend the ceasefire and reopen the Strait. However, the EIA still expects Brent to remain elevated near $105 per barrel in June and July before gradually declining as oil flows resume.
This creates a complicated oil market structure. Supply conditions remain extremely tight, but demand destruction is also growing. The EIA’s forecast for world oil demand shifted from modest growth in May to a contraction in June, showing that high prices and limited fuel availability are now affecting consumption.
Brent Crude Oil Forecast: Higher Near-Term Risk, Lower 2027 Price Path
The EIA’s June forecast keeps Brent crude oil under strong near-term upward pressure. Brent is expected to average $95 per barrel in 2026, supported by inventory draws and the delayed return of Middle East supply.
However, the agency expects Brent to decline to $79 per barrel in 2027 as supply flows recover and market balances improve. This means the EIA does not view the current oil price shock as permanent, but it does expect the disruption to last long enough to affect inventories, fuel prices, trade flows and demand patterns through the forecast period.
Compared with the May STEO, the June outlook is more cautious about the timing of supply recovery. The May report expected Brent prices to fall toward $89 per barrel in 4Q26 and then average $79 per barrel in 2027. The June report keeps the 2027 average similar but implies a more difficult adjustment period during the second half of 2026.
For traders and energy market analysts, the key message is that Brent prices remain highly sensitive to any update on the Strait of Hormuz, U.S.–Iran talks, Middle East production recovery, and global demand destruction.
U.S. Petroleum Product Prices and Exports
The June STEO shows that the impact of higher crude prices is spreading into refined products. The EIA expects diesel and jet fuel wholesale prices to rise more than 60% in 2026 and 40% in 2027 compared with its pre-conflict February outlook. Wholesale gasoline prices are expected to rise around 50% in 2026 and nearly 40% in 2027 versus the February forecast.
The disruption has also changed U.S. petroleum trade flows. Demand for U.S. crude oil and refined products has increased because global buyers are looking for alternatives to disrupted Middle East supply. U.S. net exports of crude oil and petroleum products reached a record 5.8 million barrels per day in April, and May exports remained close to that level.
For 2026, the EIA expects U.S. crude oil and petroleum product net exports to average 4.2 million barrels per day, up 1.4 million barrels per day from 2025. This highlights the growing strategic role of the United States as a key supplier during global energy disruptions.
U.S. Crude Oil Production and Inventories
U.S. crude oil production is forecast to rise gradually, from 13.6 million barrels per day in 2025 to 13.7 million barrels per day in 2026 and 14.2 million barrels per day in 2027. The upward revision reflects the impact of higher oil prices on drilling activity, shale production, and associated natural gas output.
The June report also lowers the forecast for U.S. crude oil inventories compared with the May outlook. U.S. crude stocks are now expected to average 419 million barrels in 2026 and 422 million barrels in 2027, down from the May forecast of 431 million barrels and 434 million barrels, respectively.
This inventory revision is important because it shows that even with higher U.S. output, strong export demand and global supply disruptions are expected to keep U.S. stocks tighter than previously projected.
Natural Gas Outlook: Higher Henry Hub Forecast, Stronger Production Growth
The natural gas section of the June 2026 STEO presents a more balanced but still upwardly revised market outlook. Henry Hub prices rose modestly in May, averaging $2.94/MMBtu, as warmer weather lifted electricity-sector demand for cooling.
The EIA now forecasts Henry Hub prices at $3.60/MMBtu in 2026 and $3.46/MMBtu in 2027, higher than the May forecast of $3.50/MMBtu and $3.18/MMBtu. The upward revision reflects stronger demand, higher summer power-sector consumption, and growing LNG exports.
However, the EIA also notes that natural gas prices remain relatively contained because supply growth continues to outpace demand growth. Higher crude oil prices support more U.S. oil production, which also increases associated natural gas output, especially from the Permian Basin.
U.S. marketed natural gas production is expected to grow by 3.3% in 2026, or about 3.9 Bcf/d, and by another 2.5% in 2027. The Permian region remains the key driver of the upward revision, while the Haynesville region also contributes because of its connection to Gulf Coast LNG export demand.
Compared with the May STEO, the June outlook is more bullish on Henry Hub prices but still recognizes the bearish influence of strong supply growth and above-average storage levels.
LNG Exports: U.S. Supply Gains Strategic Importance
U.S. LNG gross exports are forecast to rise from 15 Bcf/d in 2025 to 17 Bcf/d in 2026 and 19 Bcf/d in 2027. This growth is supported by export capacity additions, including developments at Golden Pass LNG and Corpus Christi.
The May STEO already highlighted LNG export capacity growth and the widening price spread between U.S. domestic natural gas and global LNG markets. The June report maintains the broader theme: U.S. LNG remains strategically important as global energy buyers seek reliable supply amid Middle East disruptions.
The combination of higher global LNG prices, growing export capacity, and resilient U.S. production supports continued LNG export expansion. However, the report also suggests that long construction lead times may limit how quickly new capacity can respond to sudden global supply shocks.
Electricity Market Outlook: Warmer Summer Lifts Demand
The June 2026 STEO expects above-average temperatures to increase U.S. electricity generation during the summer. The EIA assumes a 3% increase in cooling degree days from June to September, resulting in 1,620 billion kilowatthours of electricity generation during the period, up 3% from last summer.
Most of this increase is expected to be met by renewable energy. Utility-scale solar generation is forecast to rise 19% compared with last summer, supported by a 20% increase in average utility-scale solar capacity. Wind generation is forecast to rise around 10%, while hydropower increases 5% and nuclear generation rises 1%.
Natural gas generation is expected to remain roughly flat compared with last summer, while coal generation falls 2%. This shows that the power sector continues to shift toward renewables even as total electricity demand rises.
Compared with the May report, the June STEO places more emphasis on the role of solar and wind in meeting summer demand. The May report focused more on overall electricity consumption growth, residential electricity prices, and strong commercial-sector demand.
Coal Outlook: Production and Consumption Continue to Decline
The EIA expects U.S. coal production to decline across all major producing regions from 2Q26 through at least December 2027. Total coal production is forecast to fall 2% in 2026 to 518 million short tons, then decline by just over 4% in 2027 to 497 million short tons.
Coal consumption is also falling. During 1Q26, coal consumption declined 11% from the same period last year, mainly because warmer weather and lower natural gas prices reduced the need for coal-fired power generation. The EIA expects coal consumption in the electric power sector to fall 8% in 2026 to 386 million short tons.
High coal inventories also reduce the need for additional production. Coal inventories are expected to remain near the top of the five-year range, increasing 4% in 2026 and 3% in 2027.
The main risk to this forecast is weather. If summer temperatures are significantly warmer than expected and natural gas prices rise at the same time, coal use could increase temporarily. However, the broader structural trend remains negative for coal.
Renewable Energy Outlook: Solar and Wind Lead Growth
Renewables are one of the strongest parts of the June STEO. Solar generation continues to expand quickly, with utility-scale solar output expected to rise 19% during summer 2026. Wind generation is also forecast to increase by around 10%.
Solar’s share of U.S. electricity generation rises from 7% in 2025 to 8% in 2026 and 9% in 2027. Wind’s share rises from 11% in 2025 to 12% in 2027.
The May STEO had already revised solar generation higher because more capacity was online at the beginning of 2026 than previously estimated. The June report reinforces the same trend: solar and wind are increasingly able to absorb incremental power demand, especially during high-load summer periods.
This is important for both energy markets and emissions. Higher renewable generation reduces coal demand and limits the increase in natural gas-fired power generation, helping keep U.S. energy-related CO₂ emissions lower in 2026.
U.S. Economy, Weather and CO₂ Emissions
The EIA expects U.S. GDP growth of 2.0% in 2026 and 1.7% in 2027. This is slightly weaker than the May outlook for 2027, which projected 2.0% growth. Higher energy prices, weaker oil demand, and geopolitical uncertainty are consistent with a slower macroeconomic path.
U.S. energy-related CO₂ emissions are forecast to decline by 1.8% in 2026 as coal consumption falls, especially in power generation. Emissions are expected to rise modestly by 0.4% in 2027 as natural gas-fired generation increases.
Weather is another key variable. The June STEO assumes a warmer summer, with 3% more cooling degree days from June to September compared with summer 2025. For the full year, the EIA expects the United States to average about 4% more cooling degree days than in 2025 and 4% more than the 10-year average.
This weather assumption supports stronger electricity demand, higher gas burn in the power sector, and increased attention on summer reliability and fuel availability.
June 2026 STEO vs May 2026 STEO: Main Forecast Changes
The June STEO is more stressed than the May report in several important areas.
First, the June report assumes a longer Strait of Hormuz disruption. In May, the EIA expected shipping to begin recovering sooner. In June, the agency delays the recovery to 3Q26 and expects full normalization only by early 2027.
Second, the global oil demand outlook has deteriorated sharply. The May STEO forecast 0.2 million barrels per day of oil demand growth in 2026. The June STEO now forecasts a 1.1 million barrel-per-day decline.
Third, the Henry Hub natural gas price forecast has been revised higher. The June forecast is $3.60/MMBtu in 2026 and $3.46/MMBtu in 2027, compared with May’s $3.50/MMBtu and $3.18/MMBtu.
Fourth, the U.S. crude oil inventory outlook is tighter. The June forecast shows 419 million barrels in 2026 and 422 million barrels in 2027, below May’s 431 million barrels and 434 million barrels.
Fifth, OPEC+ crude oil production for 2026 is revised lower by 4.5%, reflecting deeper and more persistent disruptions.
Overall, the June STEO shows a market where supply risk remains elevated, inventories are tighter, demand destruction is becoming visible, and U.S. energy exports play a larger role in stabilizing global supply.
Market Impact: What the June STEO Means for Traders and Investors
For oil traders, the June STEO keeps the near-term bias supportive for Brent and refined products, especially diesel and jet fuel. However, the demand downgrade is a warning sign. If demand destruction accelerates, upside momentum in crude oil may become harder to sustain unless the Strait of Hormuz remains closed longer than expected.
For natural gas traders, the revised Henry Hub forecast is moderately bullish, but the market remains capped by strong production growth and high storage. Weather, LNG feedgas demand and power-sector gas burn will be the key near-term drivers.
For energy equities, the outlook is generally supportive for U.S. oil producers, LNG exporters and refined-product exporters. However, refiners may face a more complex environment because higher crude input costs can pressure margins unless product prices rise faster.
For utilities and power markets, the report highlights the growing importance of renewables in meeting demand growth. Solar and wind expansion may reduce coal demand and limit gas generation growth, but hotter weather still increases grid stress and fuel demand during peak periods.
For macro markets, the June STEO adds an inflation-risk layer. Higher gasoline, diesel, and jet fuel prices can pressure consumers, transportation costs, and business margins. This could affect central bank expectations if energy inflation becomes persistent.
Conclusion
The EIA June 2026 Short-Term Energy Outlook is a major update because it shows a more fragile and volatile global energy market than the May report. The prolonged Strait of Hormuz disruption has changed the oil balance, forcing large production shut-ins, sharp inventory draws, and higher petroleum product prices.
At the same time, demand destruction is now visible. The EIA’s shift from expected oil demand growth in May to a 1.1 million barrel-per-day decline in June is one of the most important signals in the report. It shows that high prices and limited fuel availability are beginning to reshape consumption.
Natural gas markets are also revised higher, with stronger Henry Hub price forecasts, rising power-sector demand and continued LNG export growth. However, strong U.S. gas production, especially from the Permian and Haynesville regions, continues to limit upside pressure.
In electricity markets, the U.S. power system is moving further toward renewables. Solar and wind are expected to meet most of the increase in summer electricity generation, while coal production and consumption continue to decline.
Overall, the June 2026 STEO sends a clear message: energy markets remain highly sensitive to geopolitical risk, but the U.S. energy system is becoming more flexible through higher exports, stronger gas production, and faster renewable generation growth.
FAQ
What is the EIA June 2026 Short-Term Energy Outlook?
The EIA June 2026 Short-Term Energy Outlook is a monthly report from the U.S. Energy Information Administration that provides forecasts for oil, natural gas, electricity, coal, renewables, energy prices, supply, demand and emissions through 2027.
What is the biggest change in the June 2026 STEO compared with May?
The biggest change is the assumption that the Strait of Hormuz remains effectively closed for longer than previously expected. This leads to deeper oil supply disruptions, larger inventory draws, lower global oil demand, and higher petroleum product prices.
What is the EIA’s Brent crude oil forecast for 2026?
The EIA forecasts Brent crude oil to average $95 per barrel in 2026, with prices near $105 per barrel in June and July before gradually declining as oil flows recover.
What is the EIA’s Brent crude oil forecast for 2027?
The EIA expects Brent crude oil to average $79 per barrel in 2027, assuming oil flows through the Strait of Hormuz gradually recover, and global inventories begin to stabilize.
How did the EIA revise global oil demand in June 2026?
The EIA now expects global oil demand to decline by 1.1 million barrels per day in 2026. In the May report, the EIA had expected demand to increase by 0.2 million barrels per day.
Why are global oil inventories falling?
Global oil inventories are falling because the closure of the Strait of Hormuz has forced Middle East producers to shut in more than 11 million barrels per day of crude oil production, while demand still needs to be met from available supply and inventories.
What is the EIA’s Henry Hub natural gas forecast for 2026?
The EIA forecasts the Henry Hub natural gas price to average $3.60/MMBtu in 2026, up from the May forecast of $3.50/MMBtu.
What is the EIA’s Henry Hub natural gas forecast for 2027?
The EIA expects Henry Hub natural gas to average $3.46/MMBtu in 2027, higher than the May forecast of $3.18/MMBtu.
Why did the EIA raise its natural gas price forecast?
The EIA raised its natural gas price forecast because warmer weather is increasing electricity-sector demand, LNG exports continue to grow, and demand is expected to rise in the second half of the forecast period.
What does the June STEO say about U.S. crude oil production?
The EIA expects U.S. crude oil production to rise from 13.6 million barrels per day in 2025 to 13.7 million barrels per day in 2026 and 14.2 million barrels per day in 2027.
What does the June STEO say about U.S. LNG exports?
U.S. LNG gross exports are forecast to rise from 15 Bcf/d in 2025 to 17 Bcf/d in 2026 and 19 Bcf/d in 2027, supported by new export capacity and strong global demand.
How will U.S. electricity generation change in summer 2026?
The EIA expects U.S. electricity generation from June to September 2026 to rise by 3% compared with last summer, reaching 1,620 billion kilowatthours, mainly because of warmer weather and higher cooling demand.
Which energy sources are growing fastest in U.S. power generation?
Solar and wind are growing fastest. Utility-scale solar generation is forecast to rise 19% in summer 2026, while wind generation is expected to increase by about 10%.
What does the June STEO say about coal?
The EIA expects coal production and consumption to decline. Coal production is forecast to fall 2% in 2026 to 518 million short tons and then decline to 497 million short tons in 2027.
What is the market impact of the EIA June 2026 STEO?
The report is supportive for near-term oil and refined-product prices, moderately bullish for natural gas, positive for U.S. energy exports, negative for coal, and constructive for renewables. However, the sharp oil demand downgrade creates downside risk if demand destruction accelerates.
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Source: U.S. Energy Information Administration, Short-Term Energy Outlook, June 2026 and May 2026.
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