- World oil demand to fall by 1.1 mil bpd in 2026 amid US-Iran conflict (previous forecast 420k bpd drop)
- World oil supply to fall by 3.9 mil bpd in 2026 (unchanged from previous forecast)
- Sees 2027 supply growth of 8 mil bpd and demand growth of 2 mil bpd
- That leaves a ‘significant overhang’ of over 5 mil bpd in the oil market
- US-Iran deal could bring an end to the largest oil supply disruption in history
- However, operational and political constraints leave downside risks to Middle East outlook despite deal
It may be a bit quick to assume a resumption to normality but the IEA is of the view that a supply glut will return to the market soon enough.
They expect a gradual recovery in the oil market to begin with before some normalisation that would tip the scales back in favour of a significant surplus next year.
I won’t argue that it is a reasonable assumption but again, baby steps. First, let’s see how this 60-day deal will be able to hold up. And more importantly, will any Strait of Hormuz reopening actually see a meaningful increase in traffic flows? Or will it follow the more troubling playbook below:
