S&P Global Warns Middle East Crude Flows Will Languish Below Prewar Levels Through 2027

Global crude markets are entering a prolonged period in which disruption is becoming a persistent operating condition rather than a sequence of isolated shocks.

A new analysis from S&P Global Energy warns that unresolved conflict and maritime danger will keep Middle Eastern oil flows severely constrained through 2027.

For the first time since the US Iran war began, S&P Global no longer expects Middle Eastern crude production to regain prewar levels by yearend 2027. Its outlook assumes no decisive conclusion to the conflict and no normalization of commercial traffic through the Strait of Hormuz.

The forecast also assumes that disruption risks in the Red Sea will persist because of activity by Iran's Houthi allies.

These threats are expected to complicate tanker movements, insurance coverage, voyage planning, and the reliable delivery of regional crude and condensate to global buyers.

Middle Eastern crude and condensate exports are forecast to average between 10 million and 16 million b/d each month through 2027.

That range compares with approximately 20 million b/d during January and February 2026, immediately before the outbreak of war.

Regional crude and condensate production is expected to average 21 million b/d during the same period.

That estimate is 4.2 million b/d below S&P Global's previous projection, reflecting the growing weight of security restrictions and logistical bottlenecks across key export routes.

S&P Global said the region has not suffered a permanent loss of production capacity.

The more immediate problem is that producers cannot consistently move available oil into international markets because shipping access, port operations, and maritime security remain subject to severe constraints.

Jim Burkhard, vice president and global head of crude oil research at S&P Global Energy, said Gulf producers have powerful financial incentives to deliver more barrels.

They are expected to pursue alternative routes and operational adjustments wherever political conditions, infrastructure, and security considerations allow.

The market, however, "is not returning to calm," Burkhard said. Instead, crude trading is adapting to unresolved warfare, persistent shipping threats, reduced regional flows, and a recovery path that is likely to remain slow and uneven for an extended period.

S&P Global expects crude prices to remain broadly between $80 and $100/bbl through 2027.

Dated Brent is projected to average about $90/bbl or more for the remainder of 2026 before averaging $86/bbl in 2027, which is $5/bbl above the firm's previous forecast.

Brent recently traded above $100/bbl for the first time since July.

The near term projection broadly matches the September Short Term Energy Outlook from the US Energy Information Administration, which also anticipates Brent averaging around $90/bbl during the second half of 2026.

The forecasts separate sharply in 2027. EIA expects Brent to average $74/bbl for the year and decline to approximately $67/bbl during the second half, while S&P Global maintains a substantially higher annual estimate of $86/bbl.

The $12/bbl difference largely comes from conflicting assumptions about how quickly Middle Eastern supply can recover.

EIA expects regional crude production to return near averages recorded before the conflict by the second quarter of 2027, while S&P Global sees no full recovery by yearend.

Supply disruption is not the only force reshaping the market. The Russia Ukraine war and the US Iran conflict have reduced refinery output through infrastructure damage and product transportation difficulties, while China has cut seaborne crude purchases and refinery processing rates.

Those pressures have weakened crude demand and restrained price increases that might otherwise have been much larger.

S&P Global expects worldwide crude demand to average 80.2 million b/d during the fourth quarter of 2026, down 4.7 million b/d from the same period one year earlier.

Consumers have not vanished, but refiners have limited capacity to process additional barrels, Burkhard said.

Lower Middle Eastern production is supporting prices, while refining restrictions and subdued Chinese imports are suppressing demand, trapping the market between scarce accessible supply and insufficient processing capacity.