Middle Eastern Crude Supply to Plunge Amid Ongoing Conflict

The Strait of Hormuz conflict is expected to drastically reduce Middle Eastern crude oil supply through 2027, according to an S&P Global report. The report predicts that monthly output will average around 10 million-16 million barrels per day (b/d) during this period.

This represents a nearly 50% reduction from the pre-war level of around 20 million b/d. Jim Burkhard, Vice President and Global Head of Crude Oil Research at S&P Global Energy, notes that while production capacity has not been permanently lost, security and logistical challenges are limiting oil supply.

The market is adjusting to a new normal defined by unresolved conflict and persistent maritime risk, where oil flows stay below pre-war levels. Burkhard adds that Gulf producers have strong incentives to adapt around political and security constraints and find ways to move more oil to market.