The U.S. Energy Information Administration released updated projections regarding Middle Eastern oil production disruptions stemming from regional tensions that intensified in late July. The agency anticipates that traffic through the Strait of Hormuz will remain severely limited through August before beginning a gradual recovery in September.
According to the EIA’s latest Short-Term Energy Outlook, total production shut-ins across Middle Eastern producers averaged 5.5 million barrels per day in July, a significant decline from the 10.1 million barrels per day recorded during the March-May period. Third-quarter shut-ins are now projected at 6.72 million barrels per day, higher than previously estimated due to recent declines in Strait traffic. Individual country impacts include Saudi Arabia with 2.3 million barrels per day offline, Iraq with 1.96 million barrels per day, and Kuwait with 1.05 million barrels per day as of July.
The outlook indicates that most Middle Eastern crude oil production will return to near pre-conflict levels in early 2027, with shut-ins declining to 1.68 million barrels per day in the first quarter of that year. However, approximately 600,000 barrels per day is expected to remain offline through the end of 2027. The United Arab Emirates, which exited OPEC in May, has fully restored production and maintained exports at pre-crisis levels by utilizing alternative shipping routes and operating tankers in dark mode.
The prolonged supply constraints have prompted the EIA to raise its third-quarter Brent crude oil price forecast by $11 per barrel, with projections now centered around $85 per barrel. As of early Wednesday trading in Asian markets, Brent crude was trading near $89 per barrel, reflecting diminished expectations for U.S.-Iran negotiations that might restore Strait access. The agency acknowledged that regional escalation or de-escalation could substantially alter these projections.
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