The International Energy Agency (IEA) warned that a recent escalation in hostilities between the U.S. and Iran threatens to disrupt its projections for a major global oil market surplus next year, even after global supply rebounded in June following the reopening of the Strait of Hormuz. Last month, a temporary peace agreement between the two nations allowed the vital shipping corridor to reopen, providing relief to global markets after its effective closure halted up to 14 million barrels per day (bpd) of crude transport during the worst oil supply crisis in history.
According to the IEA, global supply increased by 4.1 million bpd in June, though it remained 9.4 million bpd lower than pre-war levels. While the agency forecasts that global production will expand by 7.5 million bpd next year—rebounding from a 3.7 million bpd contraction this year—this recovery depends entirely on uninterrupted transit through the Strait. The IEA noted that the renewed fighting on July 7–8 obscures the market outlook, adding that a permanent peace deal is essential for the stabilization of oil markets.
The agency’s projections for 2027 suggest that global supply will surpass demand by 4.62 million bpd next year, flipping from an 860,000 bpd deficit this year, assuming producers can restart idle oil fields and refineries can return to normal operations. The Paris-based organization expects global oil demand to drop by 1 million bpd this year before recovering to grow by 2 million bpd in 2027. In the short term, peak summer fuel consumption is projected to lift demand by roughly 8 million bpd compared to the crisis-induced lows recorded in May.
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