EIA Sees 600,000 Bpd Middle East Oil Offline Through 2027

Crude oil is holding firm near the top of its yearly range as the United States Oil Fund (AMEX:USO) trades at 134.64 dollars, up 0.07% on the day, sitting close to its 52 week high of 142.33 and well above its low of 102.42. The steadiness reflects a market still absorbing the fallout from the Strait of Hormuz disruption, and it is why the phrase eia sees 600 has been circulating among traders trying to gauge how long the squeeze on Middle East supply will last.

At a Glance

• USO trades at 134.64 dollars, up 0.07%, with an RSI of 61.18 signaling moderate bullish momentum.
• The EIA expects roughly 600,000 barrels per day of Middle East production to stay offline through the end of 2026.
• Third quarter shut ins across the region are now pegged at an average of 6.72 million barrels per day.
• The UAE has fully restored output and exports despite the Hormuz bottleneck, using pipeline and tanker workarounds.
• The EIA raised its third quarter Brent forecast by 11 dollars per barrel to around 85 dollars.

Why the EIA sees 600,000 barrels a day stuck offline

The U.S. Energy Information Administration's latest Short Term Energy Outlook lays out a slow motion recovery for Gulf oil supply. Tensions that flared in late July and lingered through August have kept shipping through the Strait of Hormuz severely restricted, and the agency now expects that pressure to persist through this month before flows begin easing in September. Even as conditions normalize, the EIA does not expect a full return to pre conflict production levels until early 2027. That leaves a stubborn gap: about 600,000 barrels per day of Gulf output, the agency reckons, will simply stay shut in through the close of 2026.

That forecast rests on an assumption that Hormuz traffic stays choked through August before gradually recovering. The EIA also notes that Houthi threats against tankers carrying Saudi crude through the Bab el Mandeb Strait have not, so far, triggered any extra production shut ins beyond what Hormuz has already caused.

How shut ins have shifted since spring

The scale of lost output has actually improved from its worst point. Middle East shut ins averaged 5.5 million barrels per day in July, nearly half the 10.1 million barrel per day average seen from March through May. But the third quarter number has since been revised higher, to 6.72 million barrels per day, because Hormuz traffic sank to a more than two month low in recent weeks.

Not every producer has been hit equally. Saudi Arabia had roughly 2.3 million barrels per day curtailed as of July, Iraq about 1.96 million, and Kuwait around 1.05 million. The United Arab Emirates, which left OPEC on May 1, is the outlier: it had already restored full production by June.

Abu Dhabi National Oil Company has leaned on several workarounds to keep barrels moving. It has offered close to 100 million barrels in spot tenders since June while pushing output to record levels, using onshore pipelines to route crude from the west to the east of the country and skip Hormuz entirely, transferring cargo to larger vessels outside the strait, and running tankers through the passage in what is described as dark mode, with transponders switched off.

What the EIA's outlook means for prices

The agency's response to the tighter supply picture has been a sharp upward revision to its price forecast. Brent crude is now projected to average around 85 dollars per barrel in the third quarter, an increase of 11 dollars per barrel from the July outlook. In early Wednesday trading in Asia, Brent had already pushed above that projection, changing hands near 89 dollars per barrel as hopes faded for any near term U.S. Iran agreement that might reopen the strait fully.

Looking further out, the EIA sees shut ins easing substantially to about 1.68 million barrels per day by the first quarter of 2027, with further declines from there. Even so, the agency's models suggest roughly 600,000 barrels per day could remain off the market by the end of 2027, a sign that some Gulf producers may not fully claw back pre crisis output within the current forecast window.

Could the outlook change again before year end

Every figure in this forecast hinges on an assumption that has already proven fragile more than once: that the standoff around Hormuz neither worsens nor resolves faster than expected. The region's supply picture has swung repeatedly over the past five and a half months, and another shift, in either direction, would send the EIA back to its spreadsheets. For now, USO's climb toward its 52 week high suggests traders are pricing in continued tightness rather than betting on a quick fix.

Live brent crude oil price and chart → Live crude oil price and chart →