EIA Sees 600,000 Bpd of Middle East Oil Still Offline by End-2027
The longer-than-expected closure of the Strait of Hormuz means that some part of the oil production in the Middle East will remain shut in through the end of next year, the U.S. Energy Information Administration (EIA) said in its latest Short-Term Energy Outlook (STEO) this week. The renewed tensions in the Middle East that began in late July and have been simmering so far in August will keep…
The U.S. Energy Information Administration (EIA) projects that approximately 600,000 barrels per day (bpd) of Middle East oil will remain offline by the end of 2027 due to the ongoing tensions in the region. According to the EIA's Short-Term Energy Outlook (STEO), oil shipments through the Strait of Hormuz will continue to be severely constrained through August, with flows only gradually increasing in September.
This forecast is based on the assumption that the Strait of Hormuz will remain a significant source of shut-ins, with flows expected to return to near pre-conflict averages in early 2027. The EIA does not anticipate that the Houthi threats to ships transporting Saudi crude oil through the Bab el-Mandeb Strait have led to any additional shut-ins of crude oil production.
Currently, a range of Gulf oil producers, including Saudi Arabia, Iraq, and Kuwait, have some portion of their supply curtailed, with total shut-ins averaging 5.5 million bpd in July, down from 10.1 million bpd during March-May. The UAE has managed to restore its crude oil production to pre-crisis levels, while other Gulf oil producers continue to experience some level of curtailment.
The EIA anticipates that Middle East production and trade patterns will not fully return to pre-conflict status until early 2027, as shut-ins among Middle East producers averaged 6.72 million bpd in the third quarter, higher than the July STEO forecast.
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