IEA Warns Renewed U.S.-Iran Conflict Could Upend Oil Surplus Forecast
IEA Warns Renewed U.S.-Iran Conflict Could Upend Oil Surplus Forecast What I Cover Tsvetana Paraskova is an energy and commodities journalist who has contributed to Oilprice.com for nearly a decade, covering global energy markets, commodities,… Despite the tentative recovery of oil flows through the Strait of Hormuz and the first build-up in global stocks since the war began, this week’s re-escalation of the U.S.-Iran hostilities could flip the outlook for an oil market surplus for next year, the International Energy Agency said on Friday.
Oil priceshave plunged since the United States and Iran signed the memorandum of understanding (MoU) in the middle of June, with North Sea Dated prices down by $31 per barrel in June to $68 a barrel by early July, their lowest since January and $2 per barrel below pre-war levels.
“An escalation in hostilities on 7-8 July, however, clouds the outlook and could upend the forecast that sees the market flipping to a surplus next year,” the IEA said in its closely watchedOil Market Reportfor July.
Since the reopening of the Strait of Hormuz, tankers have rushed to exit the Persian Gulf, including millions of barrels of Iranian crude that Tehran couldn’t move past the U.S.
As a result, global oil supply rebounded by a massive 4.1 million barrels per day (bpd) to 98.8 million bpd in June, amid a partial recovery in Gulf production, the IEA said.
However, global oil output remained about 9.4 million bpd below pre-war levels, with supply on track to decline by an average of 3.7 million bpd to 102.6 million bpd in 2026, “contingent on a swift de-escalation of renewed hostilities.” Global demand is starting to recover from the lows seen in the second quarter, with annual declines easing from 4.8 million bpd in April-June to an expected yearly drop of 1.7 million bpd in the third quarter, the IEA reckons.
Despite the wave of crude managing to clear the Strait of Hormuz in recent weeks, product supply and deliveries are much slower to rebound, with the markets still tight, the agency noted.
“The disconnect between apparently well supplied crude oil markets and tight product markets underpinned a rally in cracks and refinery margins to four-year highs by early July,” said the IEA.
“While concerns over jet fuel shortages have eased in recent weeks after refiners pushed output to new highs, diesel and gasoline markets have tightened, with gasoline cracks moving sharply higher.” Fuel Refining Margins Hit Record Highs as Markets Tighten What I Cover Tsvetana Paraskova is an energy and commodities journalist who has contributed to Oilprice.com for nearly a decade, covering global energy markets, commodities,… Oil Prices Plunge as U.S.
and Iran Reach Deal to Reopen Strait of Hormuz Oil Prices Rebound as U.S.-Iran Peace Talks Are Postponed ING: Oil Prices Have Overshot To The Downside Russia’s Oil Windfall Vanishes as Urals Crashes to $42 a Barrel Iran Tightens Grip on Strait of Hormuz Tan.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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