The latest projections from the EIA are pointing toward large global oil surpluses in 2027. Despite the ongoing supply crisis, analysts are projecting that strong supply growth and softer demand could leave the market materially oversupplied by 2027.
According to the EIA’s latest Short-Term Energy Outlook projections, global oil balances in 2027 are now expected to average a surplus of roughly 3.7 MMBbl/d. Prior to the conflict, the market was anticipating historically loose balances in 2026. In fact, the EIA’s pre-conflict February 2026 STEO projected balance surpluses slightly above 3 MMBbl/d for 2026. In that same report, the agency projected 2027 surpluses just under 2.7 MMBbl/d, more than 1 MMBbl/d lower than its latest outlook for 2027.
A major driver behind the larger 2027 surplus is the EIA’s revised outlook for US crude production. The agency raised domestic production expectations in the second half of 2026, but more notably now expects US crude production to exceed an average of 14 MMBbl/d in 2027 for the first time on record. Prior to the start of the conflict, the EIA expected US production to average roughly 13.25 MMBbl/d in 2027, nearly 750 MBbl/d lower than current projections.
Beyond stronger US production, the larger surplus outlook can also be attributed to weaker demand expectations and accelerating non-OPEC supply growth. The EIA’s latest 2027 demand projections came in roughly 0.5 MMBbl/d lower than previous estimates. At the same time, the agency expects the UAE, now operating outside of OPEC production quotas, to significantly increase output. The EIA currently projects UAE production to average more than 5.1 MMBbl/d in 2027, compared to pre-conflict production of 3.2-3.4 MMBbl/d. Meanwhile, non-OPEC+ producers excluding the UAE and the US are projected to add more than 1.2 MMBbl/d of additional supply in 2027.
The latest revisions highlight how quickly the market could shift from immediate geopolitical supply risk toward medium-term looser balances. Despite the unprecedented disruption surrounding the Strait of Hormuz, agencies and analysts are converging on the view that softer demand and strong non-OPEC production, led by the US and the UAE, could leave global oil markets oversupplied by 2027. Still, these projections are based on an eventual reopening of Strait of Hormuz flows by no later than Q2 2026, while actual physical flows remain far from normalized.