EIA expects Iran war oil disruptions through 2027

The U.S. Energy Information Administration said Tuesday that oil supply disruptions stemming from the US-Iran conflict are expected to reach approximately 600,000 barrels per day through the end of 2027, as fighting continues to restrict shipments through the Strait of Hormuz.

The forecast, part of the EIA's August Short-Term Energy Outlook, paints a picture of a global oil market still reeling from the conflict six months after it began. Oil transported through the strait averaged just 4.9 million barrels per day in the second quarter of 2026, a steep decline from 21.6 million barrels per day in the final quarter of 2025, before the U.S. and Israel launched attacks on Iran.bloomberg+2

Production Shut-Ins Easing but Remain Elevated

The EIA estimates that Middle East production shut-ins eased to an average of about 5.5 million barrels per day in July, down from 7.5 million in June. However, the agency expects shut-ins to climb again to 6.6 million barrels per day in the third quarter as storage constraints force multiple countries to curtail output.investing

Energy Secretary Chris Wright said approximately 9 million barrels of oil per day exited the strait on average over the past week, though real-time tracking remains difficult as vessels go dark to obscure shipping activity.investing

A brief pause in hostilities, during which a memorandum of understanding was signed, did little to reduce the disruption's impact on global energy markets. Talks between Iran and Oman to reopen the strait have not yielded a deal, though officials say negotiations are progressing.investing

Consumers Face Higher Fuel Prices

The EIA raised its gasoline and diesel price forecasts for 2026 by 3.7% and 5.4% respectively from last month's estimates, and increased its 2027 retail gasoline forecast by 6.5%. The Brent price forecast averages $74 per barrel in the third quarter of 2026, a reduction of $27 from the previous month's outlook.eia+1

The agency said most production and trade flows should return to pre-war levels by early 2027, assuming recent threats to vessels carrying Saudi Arabian crude through the Bab el-Mandeb Strait do not result in additional shut-ins. The EIA also raised its U.S. crude oil production forecasts, up from the 13.72 million barrels per day projected in its June outlook, reflecting domestic producers' response to the supply gap.investing+1