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(Bloomberg) — Global crude oil production and shipments are expected to bounce back toward pre-Iran War levels by the end of this year, according to a US government report, earlier than a previous estimate.
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Shut-in production from the war that peaked at a daily average of 11.2 million barrels in May will shrink to just 1.4 million by the fourth quarter, with a majority back online by the first quarter of next year, according to a monthly report from the Energy Information Administration released Tuesday.
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That marks a shift from the last round of projections, which forecast a normalization of shipments through the Strait of Hormuz by early 2027 amid a years-long disruption to some Middle East production.
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Global energy markets are still reeling from the impact of the biggest oil-supply disruption in history with some vessels continuing to face attack while traversing the strait.
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The upheaval that sent crude, fuel and fertilizer prices soaring this spring is expected to suppress oil consumption by 1.2 million barrels a day this year, with the majority of that decrease occurring in non-OECD countries, according to the report. That grouping includes nations like India, Malaysia and Brazil.
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Still, investors are expecting a significant near-term supply glut as barrels that were previously trapped inside the Persian Gulf make their way to buyers. Global oil inventories are expected to rise by 2.7 million barrels a day in the fourth quarter and 5 million a day in 2027, shifting the market back into oversupply, according to the report.
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Brent crude prices are now expected to average $74 a barrel in the current quarter of 2026 and $65 in 2027. That’s well below the prior prediction of $79 for next year.
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Similarly, US retail gasoline prices in the current quarter are expected to average around $3.80 a gallon before easing further in the fourth quarter and 2027 — considerably below last month’s forecast but still above pre-war levels.
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