IEA Expects Big Oil Surplus in 2027 After Hormuz Reopens

The International Energy Agency expects oil markets to swing into a sizable surplus next year as Gulf exports recover from the Strait of Hormuz closure, according to its monthly report released Wednesday.

The agreement between Washington and Tehran to reopen the strait and lift U.S. sanctions ended what the IEA called the largest supply disruption in history. At its peak, the closure took more than 14 million barrels a day of Middle Eastern production offline.

If the truce holds, Gulf exports and Iranian output will gradually return, the agency said. Iranian oil exports are set to resume fully once U.S. sanctions are lifted.

Global supply will rise by about 8 million barrels a day in 2027, the IEA estimated. Demand growth will lag at roughly 2 million bpd. The resulting surplus is large enough to refill depleted stockpiles and allow countries to build new strategic reserves, the report said.

The IEA noted that governments are revisiting their energy policies after the crisis. The surplus gives them room to add to emergency stocks beyond pre-disruption levels.

The scale of the projected surplus is larger than any supply overhang seen in recent years, based on the IEA's supply-demand model. The projection hinges on the durability of the U.S.-Iran accord, the agency said. Broader trends in oil supply and demand are covered in our crude oil profile.