Middle East: Sharp Drop and Start of Recovery
The conflict in the region led to the largest production decline in recent years.
- May: record drop of 11.2 million bpd;
- June: decline slowed to 8.3 million bpd.
The opening of the Strait of Hormuz after the ceasefire memorandum between the U.S. and Iran became a key factor in stabilization. The EIA expects oil volumes blocked in the Persian Gulf to fall to 8.3 million bpd, down from the May peak.
Global Inventories Shrinking Rapidly
Commercial oil inventories worldwide continue to fall:
- Q2 2026: decline of 5.1 million bpd;
- Q3: expected further reduction of 2.2 million bpd.
The reason is the mass departure of tankers that were idle in Hormuz and adjacent waters. The market is now receiving oil that was physically blocked for a long time.
Production Falls Less Than Expected
The EIA revised its global production forecast:
- Previous estimate: decline of 7.1 million bpd;
- New forecast: decline of only 4.23 million bpd.
Global supply in 2026 will decrease from 106.12 million bpd to 101.89 million bpd.
2027: Sharp Supply Growth
Next year, the market expects a strong rebound:
- supply will grow by almost 8 million bpd
- reaching 109.84 million bpd
This is below the previous EIA forecast (growth of 10.3 million bpd), but still means a return to an active phase of global trade.
What This Means for the Market
- Restoration of logistics through Hormuz will accelerate global oil turnover;
- Insurance risks in the region persist despite the ceasefire;
- Inventory deficit will support price volatility;
- 2027 will be a year of aggressive supply growth and flow redistribution.