The global oil market is set to recover gradually from the disruption caused by the closure of the Strait of Hormuz before shifting into a significant supply surplus in 2027, according to the International Energy Agency (IEA).
In its latest monthly oil market report released on Wednesday, the agency said the easing of tensions following an agreement between the United States and Iran could pave the way for a phased recovery in Gulf oil flows.
The deal reportedly includes the reopening of the Strait of Hormuz and the lifting of a US naval blockade, which would allow Iranian oil exports to resume fully and restore production across the region.
“If the deal holds, exports and production from the Gulf should see a gradual recovery – not least because Iranian oil exports can fully resume once the US blockade is lifted,” the IEA said.
The agency noted that the world is still dealing with the aftermath of what it described as the largest oil supply disruption in history, which had shut in more than 14 million barrels per day of Middle East output during the three-month conflict.
However, looking ahead, the IEA said the market could shift sharply into oversupply conditions in 2027, with global oil supply expected to rise by 8 million barrels per day, while demand is projected to grow by just 2 million barrels per day.
“This may provide a welcome respite to the market and an opportunity to replenish depleted inventories, or to build new strategic reserves, as countries review their energy strategies and policies in response to the crisis,” it added.
