Oil Market Shortage Brought on by War Despite Predictions of Oversupply
The International Energy Agency predicted in 2023 that by 2028, oil companies would produce more oil than people wanted to buy. Prices dropped too low to attract investment for new wells and refineries.
In March 2026, the Strait of Hormuz was blocked due to U.S. and Israeli attacks on Iran, leading to a shortage of oil and gas. Despite some countries having strategic reserves, releasing them did not alleviate the situation, and those reserves may need to be replenished in the future.
The mismatch between demand and supply is attributed to long-range projections made by government agencies, oil-producing countries, and big oil companies. These projections are based on assumptions about factors like economic growth, technology adoption, and policy changes. However, forecasts can be inaccurate, especially for distant targets.