EIA Forecasts Oil Crunch in 2026 and Glut in 2027 Amid Strait of Hormuz Disruption

The US Energy Information Administration (EIA) has forecasted a two-phase transition in oil markets, driven by sustained disruption through the Strait of Hormuz. The current period represents one of those rare moments where a single geopolitical variable is driving the EIA's oil crunch in 2026 and glut in 2027.

The EIA's August 2026 Short-Term Energy Outlook (STEO) projects that global production will decrease to 100.82 million barrels per day (mb/d) in 2026, resulting in a deficit of 1.91 mb/d. However, by 2027, global production is expected to increase to 109.74 mb/d, leading to a surplus of 4.78 mb/d.

The Strait of Hormuz carries roughly 20-21% of global oil liquids flows through a narrow maritime passage between Iran and the Oman peninsula. The EIA's forecast assumes that severe transit constraints will persist through at least August 2026, with a gradual normalisation pathway modelled beginning in late 2026 and extending into early 2027.

The EIA's Brent crude price forecast for this two-year period follows a three-stage structure. In the Elevated Phase (Q2 to Q3 2026), Brent is projected to average approximately $85 per barrel, representing an $11 per barrel upward revision from the prior month's STEO. The Normalisation Phase (2027) projects that Brent will average around $69 per barrel across 2027, with some scenarios pointing to levels as low as $65 per barrel if supply recovery accelerates.