The International Energy Agency (IEA) warned that the resumption of hostilities between the United States and Iran could dash hopes of turning the global oil market into one with a substantial supply surplus by 2027. The reason is disruptions to tanker traffic through the Strait of Hormuz, one of the most important sea routes for delivering “black gold.” According to the agency, this conflict has been the cause of the largest supply disruption in the history of the oil industry.
In June 2025, a temporary truce between Washington and Tehran partially reopened the strait, giving the market a brief reprieve. Based on IEA data, global oil supplies rose by 4.1 million barrels per day, but they were still 9.4 million barrels per day below pre-war levels. However, new clashes on July 7–8 again clouded prospects for steady supplies over the following year.
Before the escalation, the IEA had forecast that by 2027 global supply would increase by 7.5 million barrels per day, leading to a significant surplus of fuel on the market. But that scenario depended directly on normalization of tanker passage through Hormuz and the restoration of export capacity by producers. Now, according to agency representatives, renewed fighting calls even the near-term plans into question.
Amid instability in the Middle East, IEA head Fatih Birol urged the European Union to reconsider its strict ban on searching for new oil and gas fields in the Arctic. Speaking in Brussels after meeting Norway’s finance minister, he stressed that the world needs “every drop of Norwegian oil”—especially in a situation where key supply routes are under threat.
At the same time, the EU is pursuing the opposite policy: since October 2021, the bloc has been calling for oil, coal and gas to remain underground, including Arctic areas. The European Commission has begun reviewing its Arctic strategy, but six major institutional investors are insisting on keeping the restrictions. They argue that even if exploration begins quickly, new fields will not be able to provide additional oil in the near future, while they would seriously harm a fragile ecosystem that is warming three times faster than the global average.
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What are Iran’s current oil production and export volumes compared with the pre-war period, and how do sanctions limit the country’s ability to restore supplies? — Before the United States reimposed sanctions in 2018, Iran produced around 3.8–3.9 million barrels per day and exports reached 2.5–2.8 million barrels. By 2024, production had fallen to 3.2–3.4 million barrels per day, and exports to 1.3–1.6 million. A significant portion goes through “gray” schemes (transferring cargo to tankers with disabled transponders, sales via intermediaries to China, Syria and Venezuela). Sanctions limit Iran’s access to the international banking system (SWIFT), tanker insurance and the modernization of oil infrastructure, which prevents the country from rapidly scaling up legal supplies back to pre-war levels.
Why is the Strait of Hormuz so strategically important for Iran, and what steps could Tehran take to block it or destabilize shipping? — About 20–25% of the world’s seaborne oil passes through the Strait of Hormuz, and for Iran it is the “Achilles’ heel” of the Persian Gulf: any disruption to shipping instantly crashes global energy prices, giving Tehran leverage. Iran could use a combined playbook: mining the area, swarming fast boats (such as “homemade torpedoes”), employing shore-based anti-ship missiles (for example, “Noor” or “Khalij-e Fars”), and launching suicide drones. However, a full blockade is unlikely due to the risk of a U.S. and allied military response—more likely, the focus would be on targeted attacks or demonstrations of force to extract concessions in negotiations.
What alternative routes for exporting oil exist for Iran if the Strait of Hormuz is blocked for an extended period (such as pipelines or ports in the Gulf of Oman)? — The main alternative is a pipeline from oil fields in the south-west (for example, Gure) to the Jask terminal on the Gulf of Oman coast, which opened in 2021. But its throughput is limited (about 300–500 thousand barrels per day versus 2.5 million barrels through the strait). Iran also uses the port of Bandar Abbas to transship oil onto smaller tankers, which can then move around the strait, but that is more expensive and slower. Another route is land shipments via oil pipelines into Turkey (closed since 2019 due to sanctions) or through Iraq, but these options are unreliable due to political instability. Overall, Iran’s infrastructure is designed for exports through the strait, and a complete substitute does not exist.
Full version: تصعيد هرمز يهدد فائض النفط المتوقع في 2027