The World Bank expects Gulf crude exports to keep recovering into 2027. However, its latest Commodity Markets Outlook warns that the region's refineries, gas-processing plants and LNG trains will take far longer to return to normal. As a result, Middle East oil output will stay about 1.5 million barrels a day (b/d) below its 2025 level next year.

The October 2026 report describes the Middle East conflict as a "historic shock" to energy supplies. Restricted transit through the Strait of Hormuz cut global oil production by 9.1 million b/d year-on-year in the second quarter and by 7.2 million b/d in the third quarter.

Saudi Arabia and Iraq absorbed most of the losses. The World Bank estimates that over the two quarters, Saudi output fell by about 4.4 million b/d and Iraqi output by about 2.1 million b/d. That is equivalent to up to 45% of each country's 2025 production. Output in Iran, Kuwait and Qatar fell by between 1.2 million and 1.5 million b/d each, while the UAE lost only 0.3 million b/d. Combined increases of 2.2 million b/d from Brazil, Kazakhstan, Nigeria, Oman, Venezuela and the US offset only 18% of average gross losses.

Export workarounds

The bank's baseline assumes that the recent rebound in Gulf crude shipments holds. Entering October, Middle East oil exports were approaching their 2025 level. They were helped by ship-to-ship transfers beyond Hormuz, untracked shipments, naval escorts and near-full use of bypass pipelines.

The recovery has been concentrated on crude and condensate. Because of refinery damage, exports of refined products, including diesel, were at less than half of pre-conflict levels in September. The World Bank does not expect Gulf refinery throughput to return to pre-conflict levels until the second quarter of 2027.

The report also highlights how fragile the alternative routes are, citing the attack on Saudi Arabia's East-West pipeline and continued threats to Red Sea shipping. The baseline assumes that Gulf pipelines are fully operational.

The World Bank forecasts that Brent crude will average almost $100 a barrel in the fourth quarter of 2026 and $91 a barrel for the full year. It then expects prices to fall to $79 a barrel in 2027 and $70 a barrel in 2028. Front-month Brent futures reached about $110 a barrel in mid-October.

Global oil supply is projected to fall by 5.5 million b/d, or 5.2%, in 2026. This is the largest decline in more than four decades outside the 2020 recession. Demand is set to fall by 2.6 million b/d, or 2.5%, the third-largest drop on record after 2020 and 1980. The bank expects the market to move into surplus in the second quarter of 2027, rebuilding inventories by about 550 million barrels by the end of the year.

Demand trends also carry a warning for Gulf producers. Consumption in the Middle East, North Africa, Afghanistan and Pakistan region is estimated to fall by 7.1% this year, partly because of damage to petrochemical facilities. Global oil demand in 2027 is forecast to remain 0.6 million b/d below its 2025 level. In the second quarter of 2026, electric vehicles in China alone displaced 1.5 million b/d of road-fuel demand.

Qatari gas

The outlook for gas is weaker still. The World Bank assumes that Qatar's damaged LNG trains will stay offline for the whole forecast period, which runs to 2028. It also assumes that delays to the North Field expansion will keep Middle East gas output below its 2025 level in 2027.

Between March and June, the disruptions cut LNG loadings from Qatar and the UAE by 35 billion cubic metres year-on-year. Damaged UAE capacity is expected to be restored, allowing regional LNG exports to recover partially in the first quarter of 2027. The report adds that continued conflict could extend the force majeure Qatar declared in March on contracts for LNG and related products, including urea.

The bank says the risks to its forecasts are tilted towards higher prices. In its adverse scenario, a major escalation of hostilities cuts Gulf production by about 5 million b/d in the first half of 2027, while strikes keep Russian exports at constrained levels. Brent would then average $105 a barrel in 2027. That is 15% above the 2026 average and about 33% above the baseline.

A durable settlement would push prices the other way by releasing pent-up stocks rapidly through Hormuz. As evidence, the report cites the sevenfold surge in Iranian crude arrivals near Singapore in the first 20 days of July, after the June memorandum of understanding between Iran and the US.

The report also says the UAE as a possible source of extra supply. The World Bank says that following its exit from Opec, and assuming trade functions smoothly, the UAE could raise output closer to its capacity and exceed the baseline forecast.

For Gulf producers, the baseline means crude volumes recover while prices fall sharply in 2027 and 2028, and refining and gas export earnings lag behind. How quickly damaged downstream assets return to service will matter as much to regional revenues as the oil price itself.