Prolonged Hormuz disruption to keep 600,000 bpd offline until 2027
The U.S. Energy Information Administration expects a prolonged Strait of Hormuz bottleneck to keep 600,000 barrels per day of Middle East crude offline through 2027, cementing a long-term supply deficit that pushed its third-quarter Brent price forecast up by $11.
The U.S. Energy Information Administration (EIA) expects a prolonged Strait of Hormuz bottleneck to keep 600,000 barrels per day (bpd) of Middle East crude offline through the end of 2027. In its Short-Term Energy Outlook published on Tuesday, the agency warned that severely constrained traffic through August will further deplete global inventories. As a result, the EIA raised its third-quarter Brent crude price forecast by $11 to an average of $85 per barrel.
The revised outlook underscores that the supply shock is transitioning from an acute disruption into a structural market deficit. Brent was trading at roughly $89 a barrel in early Asian hours on Wednesday, lifted by fading hopes of a U.S.-Iran deal to reopen the waterway. The EIA’s pricing model suggests that even as traffic slowly increases in September, the market will remain tight well beyond the current quarter.
Middle Eastern shut-ins averaged 5.5 million bpd in July, down sharply from 10.1 million bpd between March and May. Yet the EIA now expects third-quarter curtailments to average 6.72 million bpd, an upgrade from its previous forecast, as Hormuz traffic recently plunged to a two-month low. The agency projects these offline volumes will only ease to 1.68 million bpd by the first quarter of 2027.
The crisis has created a stark divergence among Gulf producers. The United Arab Emirates, which exited OPEC on May 1, fully restored its crude production by June and is pushing output to record highs. Abu Dhabi National Oil Company (ADNOC) has sold nearly 100 million barrels via spot tenders since June by bypassing Hormuz through onshore pipelines, shuttling crude to larger vessels outside the strait, and running tankers in dark mode.
Other major exporters remain heavily constrained, with Saudi Arabia, Iraq, and Kuwait still shutting in 2.3 million bpd, 1.96 million bpd, and 1.05 million bpd respectively in July. The EIA noted that Houthi threats targeting Saudi crude shipments through the Bab el-Mandeb Strait have not yet triggered additional production cuts.
“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 stated. The agency added, “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.” Analysts caution that these projections remain highly vulnerable to any sudden diplomatic or military shifts in the region.
