Some oil producers in the Middle East may face difficulties restoring production to pre-conflict levels by the end of 2027, even if regional trade and shipping activity gradually return to normal early next year, according to the US Energy Information Administration (EIA).
The assessment comes as disruptions to shipping through the Strait of Hormuz and attacks on energy infrastructure have significantly reduced oil production across the region, tightening global supply and pushing crude prices to multi-year highs.
According to the EIA’s August Short-Term Energy Outlook (STEO), around 5.5 million barrels per day (mmbbl/d) of Middle East oil production was shut in during July, equivalent to more than 5% of global oil consumption.
The agency expects oil flows through the Strait of Hormuz to remain severely constrained throughout August following renewed attacks on vessels in recent weeks. However, the EIA assumes that shipments will begin to recover gradually from September.
Despite this anticipated recovery, the agency cautioned that the return of regional production will take longer. Even if most Middle East oil output and global trade recover to pre-conflict levels by early 2027, approximately 600,000 bbl/d of regional production is expected to remain offline through the end of 2027.
The prolonged production disruptions have led the EIA to revise down its forecast for global oil supply in 2026. The agency now expects global oil production to average around 100.8 mmbbl/d this year, approximately 1% below its July forecast.
Meanwhile, global oil demand is projected to average around 104 mmbbl/d in 2026, unchanged from the previous outlook. The resulting supply deficit has prompted the EIA to raise its crude oil price forecasts for both 2026 and 2027.
For 2026, Brent crude is now expected to average $86.81 per barrel, up from the previous forecast of below $82/bbl. US West Texas Intermediate (WTI) is projected to average $80.88/bbl, compared with the earlier forecast of slightly above $76/bbl.
The EIA also predicts oil prices to decline in 2027 as Middle East production and global trade recover substantially. However, the anticipated price decline is now expected to be less pronounced than previously forecast due to the prolonged shutdown of some regional production.
Brent prices are projected to average $69.39/bbl in 2027, representing a 20.1% decline from the 2026 average. This compares with the EIA’s previous expectation of a 20.9% decrease.
WTI prices are forecast to average $65.39/bbl next year, down 19.1% from 2026, compared with the previously projected 20.3% decline.
