This paper presents steady-state thermal-hydraulic analyses of various lattices of externally and internally cooled annular pressurized water reactor (PWR) fuel to identify the geometry that allows the largest possible power density while maintaining or increasing the minimum departure from nucleate boiling ratio (MDNBR) margin in current PWRs. Differences from the typical solid rod fuel are identified, and tools for the analysis are established. These involve an in-house code developed for this purpose and an adaptation of the VIPRE-01 whole-core model using a built-in heated tube option. A 13 × 13 square array that maintains the same assembly dimensions as the current 17 × 17 fuel assembly and keeps the same fuel-to-moderator ratio was identified to achieve the best performance and the largest MDNBR margin. It is demonstrated that with a proportional increase of the core flow rate, the annular fuel allows for an up to 50% power uprate at the same MDNBR margin as in current solid PWR fuel, or for a smaller uprate with larger MDNBR margins. The same uprate was found to be possible if annular fuel is used with a hexagonal lattice, such as in VVER plants. Even at this large power rating, the peak fuel temperature is smaller by hundreds of degrees centigrade than for the solid fuel. Analyses have also shown that the annular fuel is stable against both a power excursion and density wave oscillations and has only small sensitivity to oxide layer growth and manufacturing tolerances. Gap conductance asymmetry (between the inner and outer gaps) was identified as the key issue that will limit the design because gap heat transfer resistance affects the MNDBR, unlike for the solid fuel. The annular fuel MNDBR was also found to be more sensitive to variations in core operating parameters than solid fuel, but this is more than compensated for by a significantly larger MDNBR margin during normal operation.