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.

Brent crude is now projected to average $82 per barrel for 2026 and $65 per barrel for 2027. Global oil stockpiles are expected to start rebuilding, with inventory builds of 2.7 million b/d in Q4 2026, accelerating to 5.0 million b/d throughout 2027.

How the US-Iran deal changes the calculus

The Strait of Hormuz had been effectively choked off during the conflict, throttling exports from Iran, Iraq, Kuwait, and other Gulf producers. At the height of the conflict, oil flows plummeted from roughly 15 million barrels per day to as low as 1.5 to 2.5 million b/d. Reopening that channel doesn’t just restore Iranian barrels to the market — it uncorks supply from multiple producing nations that rely on the same transit route.

The 75.7 million b/d figure for 2026 still reflects months of reduced output. The 81.4 million b/d projection for 2027 assumes the diplomatic agreement holds and shipping normalizes completely.

What this means for crypto and broader markets

A Brent crude average of $65 in 2027 would represent a meaningful decline from current levels. Lower oil prices also reduce operational costs for energy-intensive Bitcoin mining operations, potentially improving miner margins and hash rate economics.

For traditional commodity traders, the projected shift from deficit to surplus creates a clear directional thesis for oil positioning. The 2.7 million b/d inventory build in Q4 2026, followed by 5.0 million b/d in 2027, suggests downward pressure on spot prices that could persist for several quarters.