The International Energy Agency (IEA) has predicted that oil supply will expand by 7.5 million barrels per day (BPD) next year after a 3.7m BPD contraction this year, but that it is contingent on improved Strait of Hormuz transits.
"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," it said, adding that a lasting peace agreement is a "must" for oil markets to normalise, according to Reuters.
The IEA's 2027 forecasts imply that supply will outweigh demand by 4.62m BPD next year from an 860,000 BPD deficit this year, provided producers can restart fields and refiners can resume normal product shipments.
The IEA said global oil supply rose by 4.1m BPD in June, but remained 9.4m BPD below pre-war levels.
An Associated Press report, cited by Al Jazeera, meanwhile said the IEA projects global oil demand to drop this year for the first time since the 2020 pandemic, largely due to the US-Iran war.
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