The Energy Information Administration just gave oil markets a reason to exhale. In its latest Short-Term Energy Outlook published July 7, the agency projects that global crude oil production will recover to pre-conflict levels by the end of 2026, effectively unwinding one of the most severe supply disruptions in recent memory.
The catalyst is straightforward: a memorandum of understanding signed between the US and Iran on June 18, aimed at ending hostilities in the Middle East and reopening the Strait of Hormuz to commercial shipping. That narrow waterway handles roughly a fifth of the world’s oil transit on a normal day.
The numbers behind the recovery
At their worst, production shut-ins during the conflict surged above 11.2 million barrels per day. To put that in perspective, that’s more than the entire daily output of Saudi Arabia under normal conditions.
The EIA now expects most of that lost production to come back online through the remainder of 2026, with full resumption anticipated in the first quarter of 2027. The agency has revised its global oil production forecast upward to 75.7 million b/d for 2026 and 81.4 million b/d for 2027.
