US sees oil disruptions from Iran conflict reaching 600,000 bpd

The United States anticipates a significant reduction in oil supply due to ongoing conflicts between the US and Iran, with disruptions potentially reaching 600,000 barrels per day by the end of next year. This estimation is based on data from the US Energy Information Administration's Short-Term Energy Outlook, which indicates a dramatic decline from the 21.6 million barrels per day average in Q4 2025, prior to the US and Israel's attacks on Iran.

The Strait of Hormuz, a critical shipping route, has been impacted, with the average export volume dropping to 9 million barrels per day over the past week. Although a recent memorandum of understanding and talks between Iran and Oman to reopen the strait show progress, the situation remains uncertain as vessels going dark obscure the true shipping activity.

The EIA has raised its gasoline and diesel price forecasts for 2026 and 2027, respectively, due to the rising fuel prices and inflation risks. While Middle East production shut-ins temporarily eased to an average of 5.5 million barrels per day in July, they are expected to increase again to 6.6 million barrels per day in Q3. This ongoing disruption is expected to continue until at least early 2027, assuming no additional production shut-ins occur due to recent threats to Saudi Arabian crude vessels.