Is a major oil surplus coming in 2027 after Hormuz reopening? IEA predicts global supply shift

The months-long persistent closure of Strait of Hormuz has kept global energy markets on edge due to soaring energy and oil prices globally.

Now the relief is expected to come on this Friday, June 19 as a US-Iran peace deal will be signed with reopening of Strait of Hormuz and complete lifting of US naval blockade of Iranian ports.

In the midst of a paradigm shift, the International Energy Agency (IEA) has issued oil outlook in its monthly report on Wednesday. This peace framework marks a potential resolution to what the IEA has termed the largest oil supply disruption in history, which effectively restricted more than 14 million barrels of daily production from the Middle East.

As per IEA’s report, the world oil market will recover gradually from the closure of the Hormuz before witnessing a significant surplus in 2027.

"If ​the deal holds, exports and production from the ​Gulf should see a gradual recovery – not least because Iranian oil ‌exports ⁠can fully resume once the U.S. blockade is lifted," the agency said.

Significantly in 2027, the oil markets will enter “a significant supply overhang” as the global oil supply will surge by 8 million bpd along with demand rising by just 2 million bpd.

"This may provide a welcome respite to the market and an opportunity to replenish depleted inventories, ⁠or ​to build new strategic reserves, ​as countries review their energy strategies and policies in response to the ​crisis."

The report comes after reportedly three Iranian tankers carrying nearly 5 million barrels of crude oil have exited the US navy blockade in the Strait of Hormuz, marking the first such outbound shipment development in two months since naval blockade.

“Their apparent departure from the blockade suggests that other Iranian-trading tankers are also preparing to resume trading,” said Michelle Wiese Bockmann, senior maritime intelligence analyst at Windward.