The U.S. Energy Information Administration (EIA) has projected that approximately 600,000 barrels per day of Middle East crude oil production will remain offline through the end of 2027, according to its latest Short-Term Energy Outlook published in August 2026. The forecast reflects the prolonged impact of the Strait of Hormuz closure that began in late July 2026.
The EIA expects Hormuz traffic to remain severely constrained through August 2026, with flows beginning to slowly recover in September. Most Middle East crude oil production is anticipated to return to near pre-conflict levels in early 2027. However, some producers around the Persian Gulf will not be able to fully restore output to pre-conflict averages during the forecast period, according to the administration.
Shut-ins among Middle East producers averaged 5.5 million barrels per day in July 2026, down from 10.1 million bpd during the March-May period. The EIA now estimates third-quarter shut-ins at an average of 6.72 million bpd, higher than previously projected as Hormuz traffic has declined to two-month lows in recent weeks. Breakdown of production curtailments as of July included Saudi Arabia with 2.3 million bpd offline, Iraq with 1.96 million bpd, and Kuwait with 1.05 million bpd.
The United Arab Emirates, which exited OPEC on May 1, has fully restored its crude oil production and managed to maintain exports at pre-crisis levels through various workarounds including direct Hormuz transit, onshore pipeline rerouting, and dark mode tanker operations. The EIA projects shut-ins to ease to 1.68 million bpd in the first quarter of 2027, gradually declining further but maintaining approximately 600,000 bpd offline by year-end 2027. The administration's forecast assumes oil shipments through Hormuz will remain severely constrained through August, with gradual increases beginning in September.
Due to continued constraints at the Strait of Hormuz, the EIA increased its Brent crude price forecast by $11 per barrel from its July outlook, now projecting Brent to average around $85 per barrel in the third quarter. The agency noted that these forecasts are contingent on current assumptions holding and could change significantly if regional tensions escalate or de-escalate. Source: U.S.
Energy Information Administration Short-Term Energy Outlook, August 2026, as reported by Oilprice.com
Source: oilprice.com