Middle East Oil Output Struggles to Recover Amid Ongoing Disruptions

The US Energy Information Administration (EIA) has revised its forecast for Middle East oil output, stating that some producers in the region will struggle to restore production levels by the end of 2027. Disruptions to shipping through the Strait of Hormuz and attacks on energy infrastructure have led to a sharp reduction in production, resulting in a global supply deficit.

The EIA estimates that about 5.5 million barrels per day of Middle East oil output was shut-in during July, representing over 5% of global consumption. The agency assumes that shipments through Hormuz will start to slowly increase in September after being severely constrained due to renewed attacks on vessels in recent weeks.

Even if global trade recovers to pre-conflict levels by early 2027, the EIA expects about 600,000 bpd of production from the region to be shut-in through the end of 2027. This will lead to a widening supply deficit and higher oil prices in both 2026 and 2027.

The agency has raised its oil price forecasts for both years, with Brent crude averaging $86.81 per barrel in 2026 and $69.39 per barrel in 2027. US West Texas Intermediate crude is expected to average $80.88 per barrel this year and $65.39 per barrel next year.

The EIA's revised forecast comes after previous predictions of an imminent increase in Hormuz shipments failed to materialize due to ongoing conflicts in the region.