U.S. Raises 2027 Oil Production Forecast as Middle East Supply Disruptions Push Up Oil Prices

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Investing.com - After supply disruptions in major oil-producing countries in the Middle East caused oil prices to surge, the U.S. has raised its forecast for domestic oil production in 2027.

According to the Short-Term Energy Outlook released by the U.S. Energy Information Administration (EIA) on Tuesday, U.S. crude oil production is expected to increase by 220,000 barrels per day in 2027, reaching 13.83 million barrels per day.

This latest forecast is about 500,000 barrels higher than the agency’s forecast in February. The previous report indicated that U.S. oil production would peak this year and then decline by 2027.

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In its latest report, the EIA stated: “Because changes in oil prices take time to impact production — from investment decisions to drilling rig deployment, and then to well completion and first production — the effect of rising oil prices on 2027 is more pronounced than on 2026 in our forecasts.”

The EIA estimates that shut-in oil production may peak in early April, mainly concentrated in Iraq, Kuwait, the UAE, and Saudi Arabia, with smaller shutdowns. The agency added that production will gradually recover as the Strait of Hormuz reopens.

The U.S. and Israel launched attacks on Iran at the end of last month, triggering large-scale retaliatory strikes from Tehran and effectively closing the Strait of Hormuz. This vital waterway typically carries about 20% of global oil flow. As storage capacity becomes saturated, the impact of production cuts is spreading across the region.

U.S. oil prices surged to nearly $120 per barrel on Monday before falling back to around $84. This rally has pushed U.S. retail gasoline prices to their highest levels since July 2024. The EIA has raised its 2026 forecast for U.S. retail gasoline prices to an average of $3.34 per gallon, up 43 cents from its previous estimate.

This article was translated with the assistance of artificial intelligence. For more information, please see our Terms of Use.

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