Middle East Oil Output to Remain Constrained Through 2027

The US Energy Information Administration (EIA) has released its latest Short-Term Energy Outlook (STEO), predicting that some Middle East oil producers will struggle to restore output to pre-conflict levels by the end of 2027.

The disruptions to shipping through the Strait of Hormuz and attacks on energy infrastructure have forced oil producers in the region to sharply reduce production, resulting in a global supply deficit and higher oil prices.

The EIA estimates that about 5.5 million barrels per day (bpd) of Middle East oil output was shut-in during July, which is over 5% of global consumption.

Although the agency expects shipments to start increasing in September, it assumes that around 600,000 bpd of production from the region will be shut-in through the end of 2027, even if trade patterns return to normal by early next year.