The world oil market will recover gradually from the closure of the Strait of Hormuz before tipping into a significant surplus in 2027, the International Energy Agency said in its monthly oil market report on Wednesday.
The U.S. and Iran reached an agreement to end the three-month-old war, which includes Iran reopening the Strait of Hormuz and the U.S. lifting its naval blockade, potentially bringing an end to the largest oil supply disruption in history which shut in over 14 million barrels per day 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 industrialised countries, said.
The oil market will then enter a significant supply overhang next year, the IEA said in its first look at 2027, with global oil supply set to surge by 8 million bpd and demand rising by just 2 million bpd.
"This may 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."
(Reuters - Reporting by Robert Harvey in LondonEditing by Tomasz Janowski)