The Scale of the Collapse

To understand the 2027 growth projections, it is essential to recognize the scale of what was lost in 2026. The U.S. Energy Information Administration (EIA) assessed that Iraq, Saudi Arabia, Kuwait, the UAE, Qatar, and Bahrain collectively shut in an estimated 10.5 million barrels per day (b/d) of crude oil production during April 2026 . This supply shock was a direct result of the effective closure of the Strait of Hormuz, a waterway through which nearly 20% of global oil supply normally transits. While the strait was not physically blocked, the threat of attack by Iran and the cancellation of insurance coverage caused most tankers to avoid it .

The supply loss was not just a daily disruption—it triggered a sustained drain on global inventories. The EIA expected global oil stocks to dwindle faster as the conflict dragged on, locking in regional production losses well beyond the initial shock . Some estimates placed the volume of oil removed from the market at 14% of global supply .

BMI's 2027 Growth Projections: Who Leads the Rebound?

With that baseline in mind, BMI’s forecast for 2027 becomes a story of recovery from catastrophic decline. The firm’s analysis, carried by Malaysian media and reported by oilprice.com, identifies clear regional leaders in the production rebound :

• Iraq: A projected 34.1% year-on-year growth rate, the strongest in the region. Iraq was among the first countries forced to slash output when the Strait of Hormuz shipping disruption began .
• United Arab Emirates (UAE): A projected 32.9% increase. The UAE has since left OPEC, freeing it of the cartel's production constraints, and has spare capacity that can be brought back online .
• Saudi Arabia: Also identified as a major 2027 growth leader, though the specific percentage was not broken out in the available BMI-linked sources .

BMI’s report frames this as a broad-based recovery: “Most oil producers in the Middle East will see their crude oil production surge by double-digit percentages next year, rebounding from this year's shut-ins due to the Iran war and the closed Strait of Hormuz” . The language is confident, but it is inextricably tied to the assumption that the Strait of Hormuz disruption—the root cause of the shut-ins—gets resolved.

The Recovery Timeline: A Tangle of Assumptions

The biggest variable in any 2027 forecast is the timeline for Strait of Hormuz normalization. Official and private-sector assessments span a wide range, making the year-on-year growth projections highly conditional.

In its May 2026 Short-Term Energy Outlook, the EIA assumed the strait would remain effectively closed until late May, with shipping traffic beginning to pick up in June . Even after traffic resumes, the agency does not expect oil shipments to return to pre-conflict levels until later in 2026, and some Middle Eastern production is assumed to remain disrupted well into 2027 .

This cautious view is echoed—and in some cases, darkened—by industry leaders:

• Sultan Al Jaber, CEO of ADNOC (UAE), stated that even if the conflict ended immediately, it would take “at least four months to get back to 80% of pre-conflict flows, and full flows will not return before the first or even second quarter of 2027” .
• Amin Nasser, CEO of Saudi Aramco, warned that the ongoing disruption could delay oil market normalization into 2027 if the situation persisted through mid-June. He described the supply shock as the largest the world has ever experienced .

The EIA also offered a conditional outlook: if the conflict ended around the end of May, most global flows were expected to recover by late 2026 or early 2027 . The ICAEW's regional economic update similarly projected that constraints on energy production would partially ease in May–June 2026, with a strong catch-up in GDP growth expected in 2027 .

What Markets Are Pricing In

Prediction markets provide a real-time, crowd-sourced lens on these uncertainties. On Kalshi, traders have been assigning probabilities to different normalization dates for Strait of Hormuz traffic, with the numbers shifting in response to ceasefire talks and diplomatic signals.

• As of late May 2026, Kalshi traders were pricing a 64% chance that Strait of Hormuz traffic would return to normal before September 2026 .
• This probability represented an improvement from earlier in the spring, but still left significant room for a delayed recovery. For example, by late May the odds of normalization before July had fallen to around 38% in some contracts, while the chance of normalization before August stood near 60% .
• Kalshi defines “return to normal” based on the seven-day moving average of transit calls through the Strait exceeding 60, as reported by the IMF’s PortWatch platform .

The market sentiment suggests traders see normalization as more likely than not by the end of summer 2026, but the wide range of probabilities across monthly contracts highlights the deep uncertainty. A 64% chance before September means there is roughly a one-in-three chance that the disruption drags on longer.

What This Means for Prices and Spare Capacity

The recovery—whenever it happens—will have direct effects on oil prices and the global supply-demand balance. The EIA has identified an extended Strait of Hormuz closure as the key upside risk for oil prices . Its May 2026 forecast projected Brent crude averaging approximately $106 per barrel in May and June 2026, declining to around $89 later in the year as production began to recover. If the strait remained shut through June, prices could rise by an additional $20 per barrel in the near term .

For 2027, the EIA’s price outlook is lower: WTI crude was forecast to average $74 per barrel, reflecting the expected normalization of supply . However, the legacy of the disruption will linger in the form of depleted global stockpiles and reduced OPEC spare capacity. The EIA now expects OPEC spare capacity to average just 2.5 million b/d in 2027, down from a previous forecast of 3.8 million b/d—a direct consequence of the UAE using its spare capacity to offset losses during the crisis .

Bottom Line

BMI’s forecast of a sharp Middle Eastern production rebound in 2027 is built on a plausible but fragile premise: that the Strait of Hormuz reopens, that damaged infrastructure gets repaired, and that producers can ramp up operations within the assumed timeline. Iraq, the UAE, and Saudi Arabia are all positioned to post large percentage gains because their 2026 baselines were so severely depressed. The real question is not whether the percentage jumps will be large, but whether the recovery arrives in time for the 2027 numbers to fully materialize. For now, the Kalshi market’s 64% pre-September normalization probability and the cautious timelines from ADNOC and Aramco suggest that the rebound is likely, but not yet locked in.

The Scale of the Collapse

To understand the 2027 growth projections, it is essential to recognize the scale of what was lost in 2026. The U.S. Energy Information Administration (EIA) assessed that Iraq, Saudi Arabia, Kuwait, the UAE, Qatar, and Bahrain collectively shut in an estimated 10.5 million barrels per day (b/d) of crude oil production during April 2026 . This supply shock was a direct result of the effective closure of the Strait of Hormuz, a waterway through which nearly 20% of global oil supply normally transits. While the strait was not physically blocked, the threat of attack by Iran and the cancellation of insurance coverage caused most tankers to avoid it .

The supply loss was not just a daily disruption—it triggered a sustained drain on global inventories. The EIA expected global oil stocks to dwindle faster as the conflict dragged on, locking in regional production losses well beyond the initial shock . Some estimates placed the volume of oil removed from the market at 14% of global supply .

BMI's 2027 Growth Projections: Who Leads the Rebound?

With that baseline in mind, BMI’s forecast for 2027 becomes a story of recovery from catastrophic decline. The firm’s analysis, carried by Malaysian media and reported by oilprice.com, identifies clear regional leaders in the production rebound :

• Iraq: A projected 34.1% year-on-year growth rate, the strongest in the region. Iraq was among the first countries forced to slash output when the Strait of Hormuz shipping disruption began .
• United Arab Emirates (UAE): A projected 32.9% increase. The UAE has since left OPEC, freeing it of the cartel's production constraints, and has spare capacity that can be brought back online .
• Saudi Arabia: Also identified as a major 2027 growth leader, though the specific percentage was not broken out in the available BMI-linked sources .

BMI’s report frames this as a broad-based recovery: “Most oil producers in the Middle East will see their crude oil production surge by double-digit percentages next year, rebounding from this year's shut-ins due to the Iran war and the closed Strait of Hormuz” . The language is confident, but it is inextricably tied to the assumption that the Strait of Hormuz disruption—the root cause of the shut-ins—gets resolved.

The Recovery Timeline: A Tangle of Assumptions

The biggest variable in any 2027 forecast is the timeline for Strait of Hormuz normalization. Official and private-sector assessments span a wide range, making the year-on-year growth projections highly conditional.

In its May 2026 Short-Term Energy Outlook, the EIA assumed the strait would remain effectively closed until late May, with shipping traffic beginning to pick up in June . Even after traffic resumes, the agency does not expect oil shipments to return to pre-conflict levels until later in 2026, and some Middle Eastern production is assumed to remain disrupted well into 2027 .

This cautious view is echoed—and in some cases, darkened—by industry leaders:

• Sultan Al Jaber, CEO of ADNOC (UAE), stated that even if the conflict ended immediately, it would take “at least four months to get back to 80% of pre-conflict flows, and full flows will not return before the first or even second quarter of 2027” .
• Amin Nasser, CEO of Saudi Aramco, warned that the ongoing disruption could delay oil market normalization into 2027 if the situation persisted through mid-June. He described the supply shock as the largest the world has ever experienced .

The EIA also offered a conditional outlook: if the conflict ended around the end of May, most global flows were expected to recover by late 2026 or early 2027 . The ICAEW's regional economic update similarly projected that constraints on energy production would partially ease in May–June 2026, with a strong catch-up in GDP growth expected in 2027 .

What Markets Are Pricing In

Prediction markets provide a real-time, crowd-sourced lens on these uncertainties. On Kalshi, traders have been assigning probabilities to different normalization dates for Strait of Hormuz traffic, with the numbers shifting in response to ceasefire talks and diplomatic signals.

• As of late May 2026, Kalshi traders were pricing a 64% chance that Strait of Hormuz traffic would return to normal before September 2026 .
• This probability represented an improvement from earlier in the spring, but still left significant room for a delayed recovery. For example, by late May the odds of normalization before July had fallen to around 38% in some contracts, while the chance of normalization before August stood near 60% .
• Kalshi defines “return to normal” based on the seven-day moving average of transit calls through the Strait exceeding 60, as reported by the IMF’s PortWatch platform .

The market sentiment suggests traders see normalization as more likely than not by the end of summer 2026, but the wide range of probabilities across monthly contracts highlights the deep uncertainty. A 64% chance before September means there is roughly a one-in-three chance that the disruption drags on longer.

What This Means for Prices and Spare Capacity

The recovery—whenever it happens—will have direct effects on oil prices and the global supply-demand balance. The EIA has identified an extended Strait of Hormuz closure as the key upside risk for oil prices . Its May 2026 forecast projected Brent crude averaging approximately $106 per barrel in May and June 2026, declining to around $89 later in the year as production began to recover. If the strait remained shut through June, prices could rise by an additional $20 per barrel in the near term .

For 2027, the EIA’s price outlook is lower: WTI crude was forecast to average $74 per barrel, reflecting the expected normalization of supply . However, the legacy of the disruption will linger in the form of depleted global stockpiles and reduced OPEC spare capacity. The EIA now expects OPEC spare capacity to average just 2.5 million b/d in 2027, down from a previous forecast of 3.8 million b/d—a direct consequence of the UAE using its spare capacity to offset losses during the crisis .

Bottom Line

BMI’s forecast of a sharp Middle Eastern production rebound in 2027 is built on a plausible but fragile premise: that the Strait of Hormuz reopens, that damaged infrastructure gets repaired, and that producers can ramp up operations within the assumed timeline. Iraq, the UAE, and Saudi Arabia are all positioned to post large percentage gains because their 2026 baselines were so severely depressed. The real question is not whether the percentage jumps will be large, but whether the recovery arrives in time for the 2027 numbers to fully materialize. For now, the Kalshi market’s 64% pre-September normalization probability and the cautious timelines from ADNOC and Aramco suggest that the rebound is likely, but not yet locked in.