Oil production and exports from GCC countries will recover gradually if the US-Iran peace deal holds, potentially creating a significant surplus in 2027, the International Energy Agency (IEA) said.
Oil supplies are expected to surge by about 8 million barrels per day (bpd) to 110 million bpd, leading to a “significant overhang emerging next year,” the Paris-based agency said in a report. However, global supply is set to fall by 3.9 million bpd to 102.4 million bpd in 2026.
The US and Iran are set to sign a peace deal on June 19.
“Ships of the World, start your engines. Let the oil flow!” US President Donald Trump said in a Truth Social post after announcing the peace agreement with Iran.
According to the IEA, government inventories in the Organisation for Economic Co-operation and Development reached their lowest level since December 1990, as the pace of emergency stock releases accelerated.
Global oil demand in 2027 is projected to increase by a relatively modest 2 million bpd to 105.3 million bpd, it said.
“This may provide a welcome respite to the market and an opportunity to replenish depleted inventories, or to build new strategic reserves,” the report said.
Oil prices have retreated sharply since the peace deal was announced, reflecting expectations that the Strait of Hormuz will fully reopen and shipping traffic will normalise.
Brent crude was trading at $79.62 per barrel in morning trading, down from a peak of $120 per barrel by the end of April. West Texas Intermediate stood at $76.75 a barrel, down from $112 two months ago.