EIA Sees Global Oil Market Returning to Normal by 2027 Despite Hormuz Risks
Summary
- The U.S. Energy Information Administration said the global oil market should return to normal by 2027 despite geopolitical risks in the Middle East.
- The EIA expects global oil production and trade flows to recover to prewar levels by late 2026 or early 2027 even if disruptions in the Strait of Hormuz continue.
- The agency said international crude prices could be about $20 a barrel higher than in its previous forecast if the closure of the Strait of Hormuz lasts through the end of June.
Forecast Trend Report by Period
The U.S. Energy Information Administration said the global oil market should return to normal by 2027 despite geopolitical risks in the Middle East, though concerns over supply disruptions persist.
Walter Bloomberg reported on May 12 that the EIA expects global oil production and trade flows to recover to prewar levels by late 2026 or early 2027 even if disruptions in the Strait of Hormuz continue.
The EIA estimates that oil production disruptions tied to the Iran war will peak at about 10.8 million barrels a day in May.
It also expects Iran to cut oil production under pressure from the US.
If the closure of the Strait of Hormuz lasts through the end of June, international crude prices could be about $20 a barrel higher than in the agency's previous forecast, which assumed the waterway would reopen in late May, according to the analysis.
The Strait of Hormuz is a critical shipping route that handles about 20% of global oil supply.
Markets are focused on how prolonged tensions in the Middle East and the pace of normalization in the strait will affect crude prices and global supply chains.
JH Kim
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