IEA sees significant 2027 oil surplus after Hormuz recovery

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The International Energy Agency (IEA) expects the oil market to gradually recover from the effects of the Strait of Hormuz closure caused by the conflict in the Middle East, before experiencing a significant surplus next year.

In its monthly report released Wednesday, the agency stated that the agreement reached between Washington and Tehran to end the trade war, including the reopening of the Strait of Hormuz and the lifting of US sanctions, puts an end to the largest disruption to oil supplies in history, which halted the production of more than 14 million barrels per day (bpd) in the Middle East.

The agency explained that if the agreement holds, exports and production from the Gulf are expected to gradually recover, especially since Iranian oil exports will fully resume once the US sanctions are lifted.

The IEA estimates that global oil supply will increase by 8 million bpd next year, while demand will rise by only about 2 million bpd. This means the market will experience a significant surplus, which should provide an opportunity to replenish depleted stockpiles or build new strategic reserves, as countries review their energy strategies and policies in response to the crisis.