Oil Market Supply Deficits Expected to Persist for Years

Global oil markets are facing prolonged supply deficits due to persistent shipping bottlenecks and reduced refinery output, according to industry executives speaking at a London conference on Monday. The closure of the Strait of Hormuz by Iran following the outbreak of the US-Israeli war in February has severely disrupted exports through this critical shipping lane. Attacks on oil and gas infrastructure have further compounded the crisis, significantly hampering production and exports of both crude oil and refined fuels.

Petronas CEO Tengku Muhammad Taufik described the situation as "bedlam" for the remainder of the year and potentially into 2027. Saudi Aramco's CEO Amin Nasser warned that it could take up to two years to replenish global stockpiles that have been drawn down as an emergency measure. Nasser noted that three billion barrels have been lost since the conflict began, with one billion barrels withdrawn from global inventories.

Kuwait Petroleum Corporation CEO Shaikh Nawaf Al-Sabah highlighted a global shortfall of six million barrels per day of refined products, attributing this to the shutdown of Middle East refineries. Despite war-related disruptions, Kuwait's crude oil exports have remained steady at around one million barrels per day this year, even as production has dropped from 2.6 million to two million barrels per day.

ConocoPhillips' Executive Chair Ryan Lance predicted that global oil demand may not fully recover until 2028 or 2029. He also forecasted that the oil price floor for US benchmark WTI crude will rise to around $70 per barrel, with a mid-cycle price range of $65 to $70 per barrel. Brent crude futures were trading just above $100 per barrel on Monday, while WTI was close to $90 per barrel.