Middle Eastern Oil Production to Remain Offline Until 2027
The US Energy Information Administration (EIA) expects that some Middle Eastern oil production will remain offline until at least the end of 2027. This is due to ongoing tensions in the region, particularly in and around the Strait of Hormuz.
According to the EIA's latest Short-Term Energy Outlook, oil flows through the Strait are expected to slowly increase from September onwards, but most Middle Eastern production will not return to near-normal levels until early 2027. Approximately 600,000 barrels per day (bpd) of production could still be offline by the end of next year.
The EIA has raised its third-quarter Brent forecast by $11 to $85/barrel due to lower supply and depleting global inventories. The Strait of Hormuz's capacity constraints have led to severely reduced traffic, with an estimated 6.72 million bpd of shut-ins in the third quarter.
The UAE has been able to restore its crude oil production to pre-crisis levels by implementing workarounds such as shipping crude through the Strait in 'dark mode' and maximizing pipeline use. However, other Gulf oil producers still face significant supply curtailments, including 2.3 million bpd in Saudi Arabia and 1.96 million bpd in Iraq.