EIA projects 2026 oil crunch, 2027 glut amid Hormuz crisis

The U.S. Energy Information Administration's August Short-Term Energy Outlook projects global oil consumption will outpace production by 1.91 million barrels per day in 2026, before a dramatic reversal to a surplus of 4.78 million barrels per day in 2027. The forecast, completed on August 6, reflects the mounting toll of disruptions in the Strait of Hormuz on global energy flows.

Inventory Drawdowns Drive Price Spike

The EIA estimates that global oil inventories fell by an average of 4.2 million barrels per day in the second quarter of 2026 and projects an additional drawdown of 3.8 million barrels per day in the third quarter. As a result, the agency raised its Brent crude forecast to around $85 per barrel for the third quarter — $11 per barrel higher than in its July outlook.rigzone

"Because of the large drawdown in global inventories triggered by continued disruptions in the Strait of Hormuz, we forecast that oil prices will remain elevated until global oil flows return to normal and oil inventories are replenished," the EIA said.rigzone

For the full year, the EIA sees consumption at 102.73 million barrels per day against production of 100.82 million barrels per day. In 2027, the balance reverses sharply, with production projected at 109.74 million barrels per day against demand of 104.96 million barrels per day.rigzone

Hormuz Crisis Deepens

The forecast arrives as the oil market increasingly prices in a prolonged disruption to Middle East supply. Oil flows through the Strait of Hormuz, which averaged about 18 million barrels per day before the U.S.-Iran conflict erupted in early 2026, have averaged around 2 million barrels per day so far in August, according to analytics firm Kpler. Total Middle East exports have fallen to 9.5 million barrels per day this month, less than half of the 21 million barrels per day averaged in 2025.thejakartapost

Reuters reported that an interim ceasefire agreed on June 17 has effectively collapsed and neither Washington nor Tehran appears willing to compromise. Reuters also reported that some Middle East producers may struggle to restore output to pre-conflict levels by the end of 2027.Reuters+1

A Fragile Recovery Ahead

The EIA expects most shut-in crude production to be largely restored in the first quarter of 2027, with prices declining to an average of $78 per barrel in the fourth quarter of 2026 and $69 per barrel in 2027 as inventories rebuild. However, the agency sees ongoing disruptions of about 600,000 barrels per day persisting through the end of next year.rigzone

The International Energy Agency, in a separate assessment, said it expects global oil supply to drop by 4.3 million barrels per day for the full year and cut its 2026 demand forecast, citing high fuel prices and Hormuz disruptions. Refined fuel markets have grown exceptionally tight, with global refinery throughput in July running nearly 5 million barrels per day below year-earlier levels, leaving U.S. diesel inventories at their lowest seasonal point in three decades.oilprice+2