Renewed US-Iran hostilities could derail 2027 global oil surplus: IEA

The IEA has warned that renewed US-Iran hostilities could derail its forecast of a global oil surplus in 2027 despite a rebound in supplies after the Strait of Hormuz reopened

A recent escalation of hostilities between the United States (US) and Iran could upend the International Energy Agency's (IEA's) forecast of a significant oil market surplus next year, the agency said on Friday, as global supply rose in June after the Strait of Hormuz reopened but remained below pre-war levels.

 

Global oil markets received some respite last month after a peace agreement between the US and Iran facilitated the reopening of the Strait of Hormuz, the effective closure of which had disrupted as much as 14 million barrels per day (bpd) of crude oil flows at the peak of the crisis.

 

 

The IEA said global oil supply rose by 4.1 million bpd in June but remained 9.4 million bpd below pre-war levels.

 

The agency forecasts supply to expand by 7.5 million bpd next year after a contraction of 3.7 million bpd this year, but said that outlook depends on improved transit through the Strait of Hormuz.

 

“An escalation in hostilities on July 7-8, however, clouds the outlook and could upend the forecast that sees the market flipping to a surplus next year,” it said.

 

The IEA's 2027 projections imply that supply will exceed demand by 4.62 million bpd next year, compared with a deficit of 860,000 bpd this year, provided producers can restart fields and refiners resume normal product shipments.

 

IEA Executive Director Fatih Birol also urged the European Union (EU) to revisit its moratorium on oil and gas drilling in the Arctic, challenging the bloc's long-standing opposition to new fossil fuel development in the region.

 

“I support the Commission to give a very close look at this issue because it is extremely important for European energy security,” Birol said.