The conflict in the Middle East has deepened forecasts of a global oil deficit in 2026, according to a Reuters poll of analysts, but recovering Gulf flows, robust US production and weaker demand from China are expected to tip the market into an oversupply in 2027.
The Iran war has choked crude production and exports out of the Gulf, prompting analysts to cut their near-term supply forecasts and reverse course on previous expectations of a glut this year. Eight analysts polled by Reuters see an average deficit of 1.5-million barrels per day in 2026, roughly double the 750 000 barrels a day deficit forecast in a similar poll in April. In contrast, prior to the Iran war, analysts expected a 1.63-million barrels a day surplus for 2026.
However, the market is expected to bounce back to a surplus of 1.9-million barrels a day in 2027, the poll showed.
"This market has flipped from fear of shortage to glut risk fast. US energy dominance shines through — our exports have been a lifeline," said Phil Flynn, senior analyst with Price Futures Group.
The Iran war, which began with US and Israeli strikes against Iran on February 28, triggered Iranian attacks on Gulf states that host US bases and caused major disruptions to global energy supplies due to the effective closure of the Strait of Hormuz, a conduit for about a fifth of pre-war oil supplies.
