(Bloomberg) - More than 9 million barrels a day of oil production from key Middle Eastern countries are expected to be shut in during April, according to estimates from the US government, as the war in Iran upends global energy markets.
Iraq, Saudi Arabia, Kuwait, the United Arab Emirates, Qatar and Bahrain have collectively reduced 7.5 million barrels per day of crude production in March, according to estimates from the US Energy Information Administration’s Short-Term Energy Outlook. That number is set to reach 9.1 million barrels a day in April, the agency estimated.
The figures are the latest sign that the war in Iran has led to one of the worst disruptions to global energy markets in history as shipments through the critical Strait of Hormuz are severely curtailed. The resulting surge in prices also now means that global demand is expected to grow by just half the amount that was previously forecast.
If the conflict draws to a close by the end of April, as the agency assumes, the volume of production offline will likely reduce to 6.7 million barrels per day in May, according to the report. By late 2026, output would be expected to return near pre-conflict levels.
“Once flows through the Strait of Hormuz resume, we assume it will take time to resolve the backlog and disruption to oil tanker routes and trade flows and that the potential for future disruptions will remain at risk and create a premium in the oil price,” the EIA said in its report.
President Donald Trump has issued an 8 pm ET deadline on Tuesday for Iran to reopen the Strait of Hormuz before the US begins attacks on critical infrastructure. Both oil benchmarks are trading above $100 a barrel, near the highest levels since 2022.
Global buyers have increasingly turned to the US to fill the gap left by Middle Eastern counties, with American crude exports set to surge to records this month. US drillers are also expected to follow Trump’s call for higher oil production as prices surge to multi-year highs.
The EIA now expects US crude production to climb further next year. The country’s output is expected to reach nearly 14 million barrels a day in 2027, up by 120,000 barrels a day from the last estimates in March.
For now, disruptions in the Middle East will mean oil prices remain elevated, according to the report. The EIA sees Brent crude oil, the global benchmark, averaging around $115 a barrel in the second quarter of 2026 – up $24 from last month’s projections. For the full year, it expects an average price of $96 a barrel.
Similarly, the cost of gasoline and diesel are also expected to rise, in a pain point for American consumers grappling with higher inflation and posing political headwinds for Trump’s Republican party ahead of the midterm elections.
The EIA expects retail gasoline prices to climb as high as $4.30 a gallon on average in April — prices are averaging $4.14 a gallon now, according to the American Automobile Association. It projects an average price of $3.70 a gallon on the year – a 36-cent increase from March’s numbers.
As oil and fuel prices surge, investors are also watching closely for signs of demand destruction.
Global oil demand growth this year is already seen dropping as a result of the conflict, primarily due to reduced consumption in Asia. The report projects an average of 600,000 barrels per day in demand growth in 2026, down from projections of 1.2 million barrels per day.
By Will Kubzansky
With assistance from Alex Longley, Mia Gindis and David Wethe
