The global oil supply shock triggered by the Iran conflict has\nmassively eroded crude demand, but the International Energy Agency (IEA)\nwarns that a long-term peace resolution could spark a production surge\nand lead to an excessive oil glut next year.<\/p>\n
In its latest monthly market report released on Wednesday\n(17\/6\/2026), the IEA slashed its 2026 demand outlook to 1.1 million\nbarrels per day year-over-year. This marks a drop of 700,000 barrels per\nday from last month\u2019s forecast, after shipment volumes plunged by as\nmuch as 5 million barrels per day in the second quarter due to the war\u2019s\nimpact.<\/p>\n
Meanwhile, total global oil supply fell to 94.5 million barrels per\nday in May, a monthly decline of around 600,000 barrels per day. This\ndragged production capacity down to 13.6 million barrels per day, well\nbelow pre-conflict levels in the Middle East.<\/p>\n
IEA projects total global supply will drop by 3.9 million barrels per\nday year-over-year in 2026 to 102.4 million barrels per day, before\nrebounding strongly to 110.3 million barrels per day next year. The\ncurrent demand slump reflects a combination of high fuel prices and\nshortages of refined oil products across various nations.<\/p>\n
However, global supply is expected to surge by roughly 8 million\nbarrels per day to around 110 million barrels per day in 2027. This\nincrease will vastly outstrip a moderate demand recovery of just 2\nmillion barrels per day, bringing demand to 105.3 million barrels per\nday.<\/p>\n
\u201cOur first look at the 2027 market balance points to the emergence of\na very significant oil supply surplus next year,\u201d the IEA stated in its\nofficial report regarding the potential crude glut in international\nmarkets.<\/p>\n
The report was released as global investors scrutinise the impact of\na peace memorandum between the US and Iran and plans to reopen the\nStrait of Hormuz on the energy sector. Global crude prices have already\ntumbled to a three-month low ahead of the formal signing ceremony\nscheduled in Geneva on Friday.<\/p>\n
Market sentiment was also influenced by the passage of three Iranian\ntankers carrying nearly 5 million barrels of crude after being allowed\nthrough a US naval blockade. In futures trading, Brent crude weakened\n0.7% to US$78.44 per barrel, while US West Texas Intermediate (WTI) for\nJuly delivery fell 1.1% to US$75.18 per barrel.<\/p>\n
\u201cIf this deal holds, export and production volumes from the Gulf\nregion will recover gradually\u2014particularly as Iranian exports can resume\nfully once the US blockade is lifted,\u201d the IEA added in its market\nprojection.<\/p>\n
Although shipping volumes through the Strait of Hormuz have rebounded\nfrom a May low of 9.6 million barrels per day to around 12 million\nbarrels per day, aided by ship-to-ship transfers, the IEA cautioned that\na full recovery will not happen instantly. Authorities stressed that\nclearing naval mines from major shipping lanes and restoring global\nsupply chains will take months.<\/p>\n
The IEA also highlighted the critical depletion of global oil\ninventories during the conflict. World stocks shrank by a dramatic 143\nmillion barrels in May, following a 74 million barrel decline in April,\nmeaning reserves have evaporated at a rate of roughly 3.8 million\nbarrels per day since the war erupted on 28 February.<\/p>\n
\u201cDespite significant declines in crude and refined product demand,\nthe buffer in the system continues to erode at a record pace. Further\ndrawdowns in the coming months could push global stocks to historic lows\nbefore the market balance shifts towards surplus later in the year,\u201d the\nIEA explained.<\/p>\n
PVM Oil Associates analyst Tamas Varga noted that despite the deep\ndepletion of reserves, current oil prices are already very close to\ntheir levels at the end of February. \u201cCertainty regarding the reopening\nof the Strait of Hormuz will directly affect global oil balance\nprojections, with the key question now being how much oil flow will\nreturn to the international market,\u201d he concluded.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/us-iran-peace-may-be-achieved-but-the-world-wont-recover-overnight-1781711456", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }