Middle East oil disruption to persist through 2027 as Iran keeps Strait of Hormuz closed

Iran announced on August 10, 2026, that the Strait of Hormuz will remain closed until the United States lifts its naval blockade. Although Iran and Oman are close to a safe-passage shipping agreement, Iranian officials emphasize this is separate from reopening the waterway. The U.S. Energy Information Administration reports that shipping constraints and infrastructure attacks shut in 5.5 million barrels per day of Middle East oil in July 2026, and projects that 600,000 barrels per day will remain offline through 2027, keeping global energy prices elevated.

Strait of Hormuz closure

• ▪The Strait of Hormuz will remain closed to shipping until the United States agrees to demands including lifting a naval blockade, according to a statement by the Iranian Foreign Ministry on August 10, 2026.
• ▪The U.S. Energy Information Administration expects shipping flows through the Strait of Hormuz to remain severely constrained through August 2026 following renewed attacks on vessels.

Middle East oil production shut-ins

• ▪The U.S. Energy Information Administration estimated that approximately 5.5 million barrels per day of Middle East oil output, representing over 5% of global consumption, was shut-in during July 2026.
• ▪Even if regional trade patterns recover by early 2027, approximately 600,000 barrels per day of Middle East oil production will remain shut-in through the end of 2027, according to the U.S. Energy Information Administration.

Global oil supply deficit

• ▪Global oil demand is projected to average approximately 104 million barrels per day in 2026, according to the August 2026 short-term energy outlook from the U.S. Energy Information Administration.
• ▪The U.S. Energy Information Administration lowered its 2026 global oil output forecast to approximately 100.8 million barrels per day, which is 1% below its July 2026 forecast.

Brent crude price forecasts

• ▪The U.S. Energy Information Administration projects Brent crude prices will decline to average $69.39 a barrel in 2027 as Middle East oil output and global trade recover.
• ▪The U.S. Energy Information Administration raised its 2026 Brent crude oil price forecast to average $86.81 a barrel, up from its previous forecast of under $82 a barrel.

Iran-Oman shipping negotiations

• ▪Iran and Oman are negotiating an agreement focused on establishing a safe passage route for shipping, which Iranian officials state is separate from reopening the Strait of Hormuz.
• ▪U.S. Secretary of State Marco Rubio stated in August 2026 that the shipping negotiations between Iran and Oman are being conducted with American input.

U.S. naval blockade demands

• ▪Iranian Foreign Minister Abbas Araghchi stated on August 8, 2026, that while Iran and Oman are very close to a shipping agreement, reopening the waterway remains contingent on other conditions.
• ▪Iranian Foreign Ministry spokesman Esmail Baghaei stated on August 10, 2026, that fully reopening the Strait of Hormuz is contingent upon the United States removing conditions imposed on Iran.

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