US Energy Agency Expects Oil Market To Normalise By Early 2027 Despite Hormuz Risks

ISTANBUL, May 13 (Bernama-Anadolu0 -- The US Energy Information Administration (EIA) expects global oil production and trade flows to largely return to pre-conflict levels by late 2026 or early 2027, even as risks around the Strait of Hormuz continue to weigh on the oil market, Anadolu Ajansi reported.

In its May Short-Term Energy Outlook released Tuesday, the EIA said traffic through the Strait of Hormuz has largely been at a standstill due to the risk of attacks on oil tankers and a US blockade against Iranian oil shipments through the waterway.

The agency said it now assumes the strait will remain effectively closed through late May, with flows slowly starting to resume in late May or early June.

“Even after flows resume, we expect it will take until late 2026 or early 2027 for most pre-conflict production and trade patterns to resume,” the EIA said.

The agency estimated that West Asia oil production shut-ins averaged 10.5 million barrels per day in April and will peak at nearly 10.8 million bpd in May, as storage capacity constraints force producers to curb additional volumes.

It said Iran is also expected to reduce output partly because the US blockade has curtailed the country’s ability to export oil.

The EIA forecasts that global oil inventories will fall by an average of 8.5 million bpd in the second quarter of 2026, keeping Brent crude prices around US$106 per barrel in May and June.

As traffic through Hormuz gradually resumes and shut-in production starts returning, the agency expects Brent prices to fall to an average of US$89 per barrel in the fourth quarter of 2026 and US$79 per barrel in 2027.

However, the EIA warned that prices remain highly sensitive to the timing of any reopening.

The agency said that if the reopening of the strait is delayed by one month, through late June, crude prices would be more than US$20 per barrel higher than its current forecast in the near term.

Prices would remain above the current forecast through next year, although the gap would narrow over time, it added.

The Strait of Hormuz, one of the world’s most critical oil chokepoints, has been disrupted since the Iran war began in late February, sharply reducing crude flows from major Gulf producers to global markets, particularly Asia.

-- BERNAMA-ANADOLU