The great fear of the oil crisis seems to have subsided, the price of fuel fall, while stock markets rise following the cessation of hostilities between the US and Iran and the opening of the Ormuz Stream.
The International Energy Agency (IEA) has released a new report, which lowers its consumption forecast and warns of a huge surplus of crude oil next year.
According to the agency, the war has blocked the production of oil at over 14 million barrels per day.
ΠFull restoration will not be immediate, as shipping lanes will need to be cleared of mines. This could take months. Supply chains will take time to normalize, the report says.
Πo-small demand
Oil demand is declining, driven by higher prices and supply disruptions.
Πis forecast to decline from 1.1 million barrels per day annually by 2026. This represents a decrease of 700 thousand barrels per day compared to the May report.
The IEA also says that by 2027, demand growth will recover to 2 million barrels per day. The agency cited the normalization of trade flows, lower commodity prices and improving global economic prospects as the main drivers for this recovery.
If the deal is valid, exports and production from the Persian Gulf would need to gradually recover - not least because Iranian oil exports could fully resume after the US blockade is lifted, the June report said.
Prediction
In the first forecast for next year, experts warn of a serious oversupply. He expects the global oil supply to exceed 8 million barrels per day, which will "flood" market.
OPEC has not produced so little oil since the beginning of the century
US share of global markets has meanwhile increased
It has become clear that OPEC+ will raise its crude oil production targets.
Additional millions of barrels per day outside OPEC+ come from the US, followed by Guyana, Brazil and Canada, which continuously improving production records.
Russian crude oil and refined fuel output was stable at around 7.4 million barrels per day in May, despite continued Ukrainian drone attacks on refineries, Reuters reports.
Ukrainian drones caused the biggest drop in Russian oil output since years
Russia is the third largest oil producer in the world, and the sector is the basis of the Russian economy
This has forced Russia to prioritize fuel supplies to the domestic market and to maximize crude oil exports.
Europe and the world in anticipation
ΠPresident of the European Commission Ursula von der Leyen described the agreement between the warring parties as very important and the result of long diplomatic efforts.
ΠEuropean Central Bank President Christine Lagarde also rushed to hail the deal as "good news" in an interview with Reuters. According to her, the normalization of supplies will quickly cool inflationary pressures in Europe.
As Moneu.bg reports, the ECB became the first major central bank to raise interest rates in response to the war with Iran.
Against the backdrop of the war in Iran: the ECB raised interest rates for the first time in three years
"The war in the Middle East is generating inflationary pressures and the solution is local"
The Federal Reserve Board raised its key interest rate to 2.25% from 2%, where it has been for a year.
Lagarde, however, warned markets that history is not over until the toughest details of the Iran nuclear deal are finalized.
There are only days left until peace talks between the United States and Iran in Geneva, where say a lot about the economic future of the world as a whole. After a little over 100 days of tension over the oil crisis, the energy market is shaking up again.
Oil prices rose more than 1 percent this afternoon after US President Donald Trump threatened to resume bombing Iran if it "doesn't behave well", Reuters reported, quoted by BTA. However, prices remained near three-month lows, with the International Energy Agency (IEA) warning of a possible oversupply in 2027.
Brent crude futures, the European benchmark, rose 93 cents, or about 1.2 percent, to $79.89 a barrel.
U.S. light crude rose 79 cents, or 1.0 percent, to $76.84 a barrel.
Both contracts hit their lowest levels since early March earlier in the trading session.
The memorandum of understanding with Iran is not final and bombing could resume if “Iran doesn't behave well“, Trump said today.
“There is still some uncertainty about the position "The US is in a recession and therefore it makes sense for oil prices to rise after the sharp decline of the last few days," said Fawad Razakzada, a market analyst at City Index and Forex.com.
The oil market will enter a significant oversupply, the IEA announced in its first forecast for 2027. According to the agency's expectations, global supply will increase by 8 million barrels per day, while demand will only increase by 2 million per day.
The Iran-US deal should provide an opportunity to replenish depleted stocks or build new strategic reserves in the short term, IEA experts said.
“Markets may be underestimating the depth of the impending oversupply,“ said Crispus Nyaga, an analyst at “Empire FX“ (Empire FX).
The memorandum of understanding between the United States and Iran extends a fragile ceasefire agreed in April by another 60 days to allow the two countries to continue talks.
A full return to pre-war production and refining levels is likely to take weeks, months or even years, industry sources said, Reuters reported.
U.S. crude inventories fell by 8.3 million barrels in the week ended June 12, market sources said, citing data from the American Petroleum Institute. The data beat expectations for a drop of 4.6 million barrels. Official statistics are expected to be released later today by the U.S. Energy Information Administration.
The UAE's oil output could exceed 5 million barrels per day next year as the country increases production after leaving the Organization of the Petroleum Exporting Countries (OPEC). This makes it the main driver of supply growth outside OPEC+ (OPEC and its partners), the International Energy Agency (IEA) said today, quoted by Reuters.
The UAE said its decision to leave OPEC, announced earlier this year, aims to prioritize expanding production capacity and achieving maximum value from resources by freeing output from the organization's quota restrictions.
According to the IEA forecast, the country's total output will reach 5.2 million barrels per day in 2027, an increase of 730,000 barrels per day on an annual basis.
The UAE's crude oil production capacity has grown from 3.1 million barrels per day in 2016 to almost 4.4 million barrels in 2026, adding to this about 1.1 million barrels per day of condensate and natural gas liquids capacity, which is a testament to Abu Dhabi's long-term expansion strategy, the IEA said.
Abu Dhabi National Oil Company (ADNOC) announced that it will award projects worth 200 billion dirhams ($55 billion) between 2026 and 2028 to accelerate growth. The company also plans capital investments of about $150 billion between 2026 and 2030.
UAE Energy Minister Suhail bin Mohammed al-Mazruei told Reuters that the country could increase production capacity to 6 million barrels per day if market conditions warrant, although that is not an official target.
Exports have remained stable despite disruptions caused by the Iran conflict thanks to infrastructure such as the Habshan-Fujairah pipeline with a capacity of 1.8 million barrels per day and stocks of 42 million barrels in Fujairah, the IEA added.
Exports rose by 260,000 barrels per day in May from the previous month to 3.1 million barrels per day, while crude oil production reached 2.8 million barrels per day - still about 835,000 barrels below pre-conflict levels.
The Paris-based organization also said the increase was helped by so-called “dark” activity - tankers that turn off their transponders while sailing.
Abu Dhabi National Oil Company is also accelerating a project for a new east-west pipeline that should double Fujairah's export capacity and bypass the Strait of Hormuz. The project is about 50 percent complete and is expected to be ready in 2027.