SEATTLE (Oil Monster): The global oil market is expected to remain undersupplied through 2026 before moving into a surplus in 2027. Stronger production in the United States and easing demand in China are likely to outweigh supply disruptions caused by the Middle East conflict gradually.
A recent Reuters survey of energy analysts indicates that the ongoing geopolitical tensions have significantly tightened oil supplies this year, resulting in an estimated average supply deficit of 1.5 million barrels per day (bpd) in 2026. This forecast is much higher than earlier estimates.
The conflict has disrupted shipments through the Strait of Hormuz, a vital route for global oil trade. Although temporary improvements in shipping eased supply concerns, renewed tensions have pushed crude prices higher in recent weeks.
Despite the near-term shortage, analysts expect market conditions to change next year. Increased output from the United States, Latin America, and OPEC+ producers, along with the expected recovery of Gulf exports, could create a 1.9 million bpd global surplus in 2027.
Industry experts expect global oil inventories to recover to pre-conflict levels by early 2027 and continue rising thereafter.
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