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IEA warns renewed U.S.-Iran tensions could erase next year’s oil surplus

The IEA said a hostilities escalation on July 7 to 8 could upend its forecast for a market shift to surplus in 2025, after oil prices fell and June supply rebounded.

Reported · Written up by our desk · Energy

The International Energy Agency warned that renewed U.S.-Iran hostilities could derail expectations for a global oil surplus next year, even as crude flows through the Strait of Hormuz have tentatively improved. According to the IEA, oil prices have dropped since the U.S. and Iran signed a memorandum of understanding in mid-June. North Sea Dated prices fell by $31 per barrel in June to $68 per barrel by early July, their lowest since January and about $2 per barrel below pre-war levels.

In its July Oil Market Report, the IEA said an escalation in hostilities on July 7 to 8 clouds the outlook and could upend a forecast that the market would flip to a surplus next year. The warning comes after tankers rushed to exit the Persian Gulf following the reopening of the Strait of Hormuz.

The IEA reported that global oil supply rebounded by 4.1 million barrels per day to 98.8 million bpd in June, helped by a partial recovery in Gulf production and the movement of millions of barrels of Iranian crude that Tehran could not ship earlier during the blockade. It also said global demand is starting to recover, with annual declines easing from 4.8 million bpd in April to June to an expected yearly drop of 1.7 million bpd in the third quarter.

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