Some producers in the Middle East are likely to struggle to restore oil output to pre-conflict levels by the end of 2027, even if trade patterns return to normal by early next year, the U.S. Energy Information Administration said on Tuesday.
Disruptions to shipping through the Strait of Hormuz and attacks on energy infrastructure have forced oil producers across to Middle East to sharply reduce production, reducing global supply and sending oil prices to multi-year highs. The EIA estimated about 5.5 million barrels per day of Middle East oil output, or over 5% of global consumption, was shut-in during July, the agency said in its short-term energy outlook (STEO) for August.
The EIA now expects flows through Hormuz to be severely constrained through August after renewed attacks on vessels in recent weeks, but it assumes that shipments will start to slowly increase in September. The agency, which is the U.S. Department of Energy’s statistical arm, has previously issued similar forecasts of an imminent increase in Hormuz shipments, which failed to materialize as the Iran war dragged on.
Even if most Middle East oil output and global trade recover to pre-conflict levels by early 2027, about 600,000 bpd of production from the region will be shut-in through the end of 2027, the EIA said in the August STEO.
The EIA now expects global oil output will likely average about 100.8 million bpd this year, about 1% below the forecast in July STEO, the agency said. World oil demand, however, is expected to be about 104 million bpd, the same as the July forecast.
The widening supply deficit prompted the EIA to raise its oil price forecasts for both 2026 and 2027.
For 2026, the EIA said it now expects Brent crude oil prices to average $86.81 a barrel, and U.S. West Texas Intermediate crude to average $80.88 a barrel. The prior forecast had Brent crude averaging under $82 this year, and WTI just over $76.
Prices will decline next year as the EIA assumes Middle East output and global trade to have recovered substantially by early 2027, but it now expects a softer decline as some output will be shut for longer. Brent crude prices will fall 20.1% from 2026 to average $69.39 a barrel next year, compared to the prior forecast of a 20.9% decline, while WTI prices will decline 19.1% to $65.39 a barrel, compared to the prior forecast of a 20.3% decline, the EIA said.
(Reporting by Shariq Khan and Anjana Anil; Editing by Nick Zieminski)