The oil market is expected to enter a substantial supply surplus in 2027 after rebounding from the closure of the Strait of Hormuz, the International Energy Agency (IEA) said in its monthly report Wednesday.
The U.S. has announced an interim agreement to end the Iran war, which includes Iran reopening the key waterway and the U.S. lifting its naval blockade of Iran, potentially bringing an end to the largest oil supply disruption in history.
The war is estimated to have blocked more than 14 million barrels per day (bpd) of Middle East oil output according to the IEA.
"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 U.S. blockade is lifted," the agency, which advises industrialized countries, said.
The oil market will then fall into a significant supply overhang next year, the IEA said in its first look at 2027, as oil supply is set to surge by 8 million bpd while demand rises by just 2 million bpd.
