“Almost all of these ships have their AIS transponders off so they are dark. They’re under escort… Plus, you’ve got to add the 6 million barrels a day that are being diverted via pipelines and those pipelines are being expanded as well. In round numbers today, 14 to 15 million barrels a day are leaving the Arabian Gulf region versus the 20 million barrels a day pre-conflict. So we’re short 5 or 6 million barrels a day from this region, but it’s a much smaller hole than people think it is.”
That was Energy Secretary Chris Wright explaining to Fox News’ Brett Baier on August 13 that as a result of hostilities in the Iran war in the Persian Gulf, the Strait of Hormuz and the Gulf of Oman, Middle East oil production is down about 5 or 6 million barrels a day. That’s with the U.S. blockade against Iran plus whatever harassment Iran is still able to inflict on oil traffic.
This jives with U.S. Energy Information Administration (EIA) estimates that show OPEC oil production is down from 29.3 million barrels per day in 2025 to 24 million barrels per day in 2026. Overall global production is down as a result, from 106.1 million barrels per day to 100.8 million barrels per day, a 4.9 percent decrease.
By 2027, EIA estimates that OPEC production will be back up to 29.67 million barrels per day and so will global oil production to 109.7 million barrels per day.
But the hit to the global economy is not as bad as markets originally estimated, after WTI crude oil peaked at $114 per barrel on April 6, and now is down to about $82 per barrel as of this writing, almost a 28 percent decrease.
By December 2027, oil futures for WTI crude are down to about $70.57 as of this writing, another further 13.9 percent decrease, or an overall 38 percent drop in prices from the peak of the war.
Which is exactly what President Donald Trump promised would happen — one way or another — coming out of the war.
In other words, Iran’s capacity to disrupt global oil production and distribution is weakening rapidly as Middle East oil producers utilize U.S. Navy escorts and expand pipelines and other shipping capacities elsewhere.
As Secretary Wright explained, “Iran is attempting to hold the world economy hostage and to terrorize their neighbors. They’ve built up a giant arsenal. So, are they causing difficulties in the region? Absolutely. But they have a losing strategy at the end that will lead to the collapse of this regime in Iran as their economy gets strangled… But their ability to cause difficulties are declining. Our ability to escort and bring products out of that region is growing… They have sort of one card and it’s shrinking in size.”
So, kind of like Daffy Duck eating the gunpowder and swallowing the match, it’s a neat trick, but Iran will only be able to do it once. After that, the global economy will have already adjusted — and never look back — taking away the last little leverage Iran had left.
And with U.S. Treasury Secretary Scott Bessent firing up more sanctions — “from Epic Fury to Economic Fury” in Bessent’s words — perhaps Tehran should have taken the deal when it still had the chance. Time will tell — and so will oil prices as markets are smarter than anyone else. Stay tuned.
Robert Romano is the Executive Director of Americans for Limited Government Foundation.
