A recent escalation of hostilities between the US and Iran could upend the International Energy Agency's (IEA's) forecast of a significant oil market surplus next year, it said on Friday, as global supply jumped in June when the Strait of Hormuz reopened but still lagged pre-war levels. Global oil markets received some respite last month as a peace agreement between the US and Iran facilitated the opening of the Strait, the effective closure of which had taken out as much as 14-million barrels per day of crude flows during the peak of the largest oil supply crisis in history.

In its new Short-Term Energy Outlook (STEO), the EIA said last month's US-Iran MOU prompted massive revisions to its prior forecast.

Renewed U.S.-Iran hostilities and attacks on commercial shipping have reignited fears of supply disruptions through the Strait of Hormuz, sending oil prices sharply higher.