The U.S. Energy Information Administration has raised its estimates of Strait of Hormuz-related crude oil production shut-ins, warning that global oil supply constraints will persist longer than previously expected.
In its August 2026 Short-Term Energy Outlook released on August 11, the EIA estimated that production shut-ins averaged 5.5 million barrels per day in July, up from earlier projections. The agency assumes oil shipments through the Strait of Hormuz will remain severely constrained through August, with flows only slowly increasing starting in September. The revised forecast is prompting the EIA to further increase its shut-in estimate for August, which will continue drawing down global inventories.
Hormuz Flows Down 77% From Pre-Conflict Levels
The data paints a stark picture of the disruption’s scale. Crude oil and petroleum liquids transported through the Strait of Hormuz averaged just 4.9 million barrels per day in the second quarter of 2026, down from an average of 21.6 million b/d in the fourth quarter of 2025 before the conflict began. That represents a 77% drop in throughput through one of the world’s most critical energy chokepoints. At the peak of disruption in May 2026, shut-in production reached 10.8 million b/d, dwarfing the 1973 Arab Oil Embargo’s approximately 4.3 million b/d impact.
The EIA projects Brent crude will average $87 per barrel for full-year 2026, before declining to $78/b in the fourth quarter as Hormuz traffic gradually recovers. Prices are forecast to drop further to an average of $69/b in 2027 once most shut-in production is restored. Henry Hub natural gas prices are expected to average $2.87 per MMBtu in the third quarter, down 50 cents from the July STEO forecast, driven by reduced LNG feedgas demand and robust domestic production.
LNG Exports and U.S. Production Outlook
U.S. liquefied natural gas gross exports are forecast to average 16.5 billion cubic feet per day in the third quarter, slightly lower than the prior month’s estimate due to ongoing maintenance at Freeport LNG. The facility, which began maintenance on July 10, is expected to resume operations in late August, affecting approximately 2.0 Bcf/d of nominal export capacity in the interim.
Meanwhile, U.S. crude oil production is forecast to reach 13.8 million barrels per day in 2026 and climb to 14.0 million b/d in 2027, reflecting continued structural growth in shale output despite the volatile price environment. The IEA’s July Oil Market Report similarly noted that global supply rebounded by 4.1 million b/d in June as partial Hormuz reopening underpinned a recovery in Gulf production.
The EIA emphasized that it has not assumed recent threats to ships transporting Saudi Arabian crude oil through the Bab el-Mandeb strait have resulted in additional crude production shut-ins, though that risk remains a key uncertainty. Full restoration of previously shut-in production volumes is not expected until the first quarter of 2027, with January 2027 identified as the approximate milestone for complete recovery.
Sources: U.S. Energy Information Administration August 2026 STEO; IEA Oil Market Report July 2026; EIA Short-Term Energy Outlook
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