In the first monthly Short-Term Energy Outlook (STEO) since the war in the Middle East began, the U.S. Energy Information Administration (EIA) expects Brent crude oil price will remain above $95 per barrel over the next two months, before falling below $80 a barrel in the third quarter of 2026 and around $70 per barrel by the end of the year. Yet, the price forecast is highly dependent on the EIA’s modelled assumptions of both the duration of conflict in the Middle East and resulting outages in oil production.

Higher oil prices, due to the war and the de facto closure of the Strait of Hormuz, are expected to lead to more US crude oil production. The EIA expects US crude production will average 13.6 million barrels per day (bpd) in 2026 and rise to 13.8 million bpd in 2027. The 2027 forecast was revised up in March by 500,000 bpd compared to the February forecast.

US natural gas prices, however, are set to remain relatively untouched by the massive disruption to LNG supply out of the Middle East, with the Strait of Hormuz closed and the missile strikes on Qatar’s Ras Laffan LNG complex, which, as Qatar acknowledged, resulted in “extensive damage”.

The US has abundant domestic gas production, while its LNG exports were already close to maxed out even before the start of the war—meaning that no additional significant volumes can be shipped out of the US and thus raise significantly US natural gas prices.

While maxed out US LNG export capacity is bad news for Europe and Asia, which are scrambling for supply, it is good news for America’s natural gas prices.

The EIA expects US natural gas prices to be relatively unaffected by the supply shock in the Middle East. The administration forecasts that Henry Hub spot price would average about $3.80 per million British thermal units (MMBtu) in 2026, or 13 percent less than the forecast from February. The Henry Hub spot price is set to average nearly $3.90/MMBtu in 2027, or 12 percent lower than the previous month’s forecast. Lower prices in 2027 mostly reflect more associated natural gas production as a result of the jump in oil prices and the related increase in production later in the forecast.

Higher crude oil production would result in more associated natural gas production in the US. The EIA expects marketed natural gas production to average 121 billion cubic feet per day (Bcf/d) this year, an increase of 2 percent from 2025. Production would then rise by an additional 3 percent in 2027 to reach 124 Bcf/d. The 2027 forecast is almost 2 Bcf/d higher than the February outlook.

US oil and gas producers could get windfall from the higher oil prices, but the US consumers have had to contend with surging prices at the pump, where petrol and diesel prices hit the highest since 2022-2023, since the largest factor in determining the prices of these fuels is the price of crude oil. With oil traded in global markets, US gasoline and diesel prices respond to worldwide supply and demand rather than production in any single country. During the Middle East war, diesel prices have jumped more than petrol prices because the global and US markets for middle distillates were tighter and tightening faster than gasoline markets.

High fuel prices are a headache for the Trump Administration, which moved to pull all levers to try to stop the surge in oil prices—including releases from the Strategic Petroleum Reserve (SPR), and a 60-day waiver of the Jones Act, which requires that cargo transported between US ports be carried on vessels that are US-built, US-flagged, and US-crewed. The waiver applies to certain energy commodity and fertilizer cargoes.

The US Administration has also moved to temporarily ‘unsanction’ Russian and Iranian oil sales of crude already loaded on tankers in an attempt to free more oil on the market. The Administration can ill-afford high gasoline and energy prices ahead of the midterm elections in November, when Republicans will have to defend razor-thin majorities in both chambers of Congress.

The Trump Administration is grappling with the fallout of the war in the Middle East, but it also scored a major success in the latest lease sale in Alaska, where the National Petroleum Reserve oil and gas lease sale generated record-high proceeds in a well-attended auction that saw big names vying for hundreds of tracts in the Alaska National Petroleum Reserve.

The oil and gas lease sale in the middle of March resulted in 187 leases and $163.7 million in total receipts, the Department of the Interior said.

The sale, which was the first for the reserve since 2019 and the first under President Donald Trump’s One Big Beautiful Bill Act, made history for the leasing programme in the 23-million-acre National Petroleum Reserve in Alaska—it generated the most revenue ever, the highest number of tracts received bids, and the second-biggest acreage was sold in a single sale.

The Bureau of Land Management (BLM) offered 625 tracts across approximately 5.5 million acres for bid in the lease sale. In response, 11 companies submitted bids on 187 tracts covering 1,334,967 acres. ExxonMobil, ConocoPhillips, and units of Shell and Repsol bid and won tracts, among others.

The lease sale “underscores the National Petroleum Reserve in Alaska’s vital role in strengthening America’s energy security while fueling economic growth across Alaska,” Secretary of the Interior Doug Burgum said.

“The Reserve was created to support our nation’s energy needs, and this successful sale demonstrates what’s possible when we align responsible development with that original purpose,” Secretary Burgum added.

Alaska’s business and resource organizations cheered the results of the lease sale, saying that it shows renewed investor confidence in Alaska’s North Slope and the state’s long-term resource potential.

“This record-setting lease sale sends a clear signal that when Alaska offers a stable fiscal and regulatory environment, investment follows,” said Steve Wackowski, president & CEO of the Alaska Oil and Gas Association.

“That confidence is critical to advancing responsible development of Alaska’s vast resources, supporting jobs, sustaining the Trans-Alaska Pipeline System, and strengthening U.S. national security in an increasingly uncertain world.”

Connor Hajdukovich, executive director of the Resource Development Council for Alaska, commented,

“Surpassing a decades-old record demonstrates that Alaska remains globally competitive and capable of attracting significant investment under strong environmental and regulatory standards.”