LONDON: The oil market will move into a significant supply surplus in 2027 after recovering from the closure of the Strait of Hormuz, the International Energy Agency said in its monthly oil market report on Wednesday.
The US has announced an interim agreement to end the Iran war, which includes Iran reopening the strait and the US 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 of Middle East oil output, according to the IEA.
The oil market will then fall into a significant supply surplus next year, the IEA said in its first look at 2027, as supply is set to surge by 8 million bpd while demand rises by 2 million bpd.
A large supply surplus in 2027 could “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,” the IEA said.
