EIA Sees 600,000 Bpd of Middle East Oil Still Offline by End-2027
Putin Opens New Front in Shadow Fleet Fight With Threat to Seize EU Ships What I Cover Tsvetana Paraskova is an energy and commodities journalist who has contributed to Oilprice.com for nearly a decade, covering global energy markets, commodities,… The longer-than-expected closure of the Strait of Hormuz means that some part of the oil production in the Middle East will remain shut in through the end of next year, the U.S.
Energy Information Administration (EIA)saidin its latest Short-Term Energy Outlook (STEO) this week.
The renewed tensions in the Middle East that began in late July and have been simmering so far in August will keep traffic at Hormuz severely constrained through this month, which has prompted the EIA to hike its third-quarter oil price forecasts as lower supply would further deplete global inventories.
Currently, the administration sees oil flows through the Strait of Hormuz to begin slowly increasing in September, and production shut-ins in the region to further ease.
Most of the crude oil production in the Middle East is expected to return to near pre-conflict averages in early 2027.
However, some output of about 600,000 barrels per day (bpd) will continue to be offline through the end of 2026, the EIA reckons.
This forecast is based on the assumption that oil shipments through the Strait of Hormuz will remain severely constrained through August, with flows slowly increasing in September.
The EIA, however, does not expect that the Houthi threats to ships transporting Saudi crude oil through the Bab el-Mandeb Strait have resulted in any additional shut-ins of crude oil production.Related: EIA Sees Massive Uptick in US Crude Oil Inventories “If these assumptions hold, we expect it will take until early 2027 for production and trade patterns to generally return to pre-conflict status,” the EIA said in its monthly outlook published on Tuesday.
“We anticipate nonetheless that some producers around the Persian Gulf will not be able to bring oil output back to pre-conflict averages during the STEO forecast period.” The EIA estimates that shut-ins among the Middle East producers averaged 5.5 million bpd in July, nearly halved from the 10.1 million bpd shut-ins on average during the March-May period.
Shut-ins in the third quarter are now seen at an average of 6.72 million bpd, higher than in the July STEO, as traffic at the Strait of Hormuzhas plungedin recent weeks to more than a two-month low.
Of note is that the United Arab Emirates (UAE), which quit OPEC on May 1, had fully restored its crude oil production as early as June, while all other Gulf oil producers still had some part of their supply curtailed as of July, including 2.3 million bpd in Saudi Arabia, 1.96 million bpd in Iraq, and 1.05 million bpd in Kuwait.
The UAE has managed to boost itsoil exports to pre-crisis levels, as it has kept pushing crude through the Strait of Hormuz and outside it.
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| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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