IEA Sees Massive Oil Surplus in 2027 Following Hormuz Recovery

The International Energy Agency (IEA) has forecasted that the global oil market will shift into a significant supply surplus in 2027, following a recovery from the closure of the Strait of Hormuz.

The IEA attributes this potential surplus to the recent US-Iran interim agreement, which includes Iran reopening the strait and the US lifting its naval blockade on Iran. This agreement could end one of the largest oil supply disruptions in history, with over 14 million barrels per day (bpd) blocked from Middle East output.

The agency expects exports and production to gradually recover in the Gulf region once Iranian oil exports resume. However, it notes that political and operational constraints may pose risks to this recovery outlook.

In its forecast for 2027, the IEA predicts that oil supply will surge by 8 million bpd while demand rises by just 2 million bpd, leading to a significant supply overhang next year. This surplus could provide a welcome respite to the market and an opportunity to replenish depleted inventories or build new strategic reserves.