Crude oil markets have moved beyond the initial supply disruption panic triggered by the Strait of Hormuz blockade, and attention is now shifting toward the pace of supply recovery and deeper structural changes in the global oil order.
More than seven months have passed since the outbreak of the US-Iran conflict, and the situation is now in the middle-to-late stage of a second round of strategic maneuvering. Over these seven months, the market has gone from supply-cut panic during the early phase of the strait blockade, to high-level oscillation amid repeated ceasefire negotiations, and now to a repricing of the pace of supply restoration. As the acute shock of the conflict is gradually absorbed by the market, it is no longer enough to simply track the short-term navigational status of the Strait of Hormuz. A broader reassessment of the supply recovery path and the structural changes in the global petroleum order is now required.
OPEC+: Divergence Between Output Increase Decisions and Physical Exports
In the first half of 2026, a massive gap emerged between OPEC+ policy expectations and reality. Since launching output increases in April 2025, OPEC+ announced monthly upward adjustments to production quotas, completing the final round of increases by September, nominally reversing all of the 2023 production cuts. However, blocked passage through the Strait of Hormuz kept these decisions on paper, and the actual production increases never materialized. OPEC output plunged from 28.65 million barrels per day in February to a low of 18.973 million barrels per day in May, a contraction of nearly 10 million barrels per day, before recovering to 24.081 million barrels per day in August. Production declines in Gulf countries were pronounced, with Saudi Arabia, the UAE, Iraq, Kuwait, and Iran—one of the geopolitical protagonists—all suffering output losses of roughly 20% to 60% during the war.
The Multipolar Evolution of Global Crude Oil Pricing Power
The weakening of OPEC+ influence is reflected not only in production being constrained by shipping, but also in the loosening of its organizational structure. The UAE formally withdrew from OPEC+ in May of this year, ending its membership. In 2025, the UAE accounted for about 4% of global crude oil supply, and after the US-Iran conflict broke out, it leveraged the export advantage of Fujairah Port to bypass the strait and quickly restored production. In the short term, the slow recovery of the Strait of Hormuz can suppress the pace at which other countries release actual production capacity, and given the severely divergent recovery speeds among Gulf states, the impact of the UAE's accelerated production increases after its withdrawal on supply-demand fundamentals remains manageable. In the long term, however, this withdrawal could produce a demonstration effect, accelerating the multipolarization of global oil supply and eroding OPEC+'s pricing control capacity.
At the same time, the United States is restructuring the supply landscape through diplomatic and commercial means. At the end of August, the Trump administration announced an unprecedented-scale oil agreement with Venezuela: private company NABEP obtained 100-year leases on 17 Venezuelan oil fields, with proven reserves in the covered fields reaching as high as 65 billion barrels. The US government holds a 35% equity stake in NABEP's parent company, a 20% production guarantee, and preferential purchasing rights over the remaining 80% of output. Currently, about half of Venezuela's production, roughly 500,000 barrels per day, is already flowing to the United States. From military intervention to sanctions relief, and then to corporate contracts and large-scale intergovernmental agreements, the United States has through this series of progressive actions effectively obtained deep control over Venezuela's oil industry, securing more say in global oil pricing.
Geopolitical Conflict Forces an Upgrade of Middle East Energy Corridors
Repeated disruptions at the Strait of Hormuz are forcing a restructuring of Middle East energy export infrastructure from the ground up. Saudi Arabia's approximately 1,200-kilometer East-West Pipeline is currently the onshore oil conduit still in operation, transporting about 7 million barrels per day to Yanbu Port on the Red Sea, bypassing the Strait of Hormuz. Riyadh is studying ways to increase the pipeline's throughput capacity or build new oil transport routes. On the Abu Dhabi side, the UAE's existing Habshan-Fujairah pipeline carries 1.8 million barrels per day, and a new east-west pipeline is already half-built, with operations next year set to double the volume of crude oil delivered to Fujairah Port. Several other planned onshore oil transport pipelines are also being considered by Middle Eastern countries. Goldman Sachs recently tracked at least seven pipeline and related export infrastructure projects in the Gulf region, and estimates that by the end of 2027, new effective bypass capacity could reach about 3.8 million barrels per day; by the end of 2028, cumulative new capacity could reach about 7.3 million barrels per day.
Strategic Thinking Under a Dynamically Revised Framework
Looking ahead, traditional forecasting methods based on supply-demand balance sheets will struggle to effectively guide decisions amid geopolitical uncertainty. The US-Iran conflict has turned the balance sheet from a static forecast into a dynamic one. In the short term, as the US and Iran enter a negotiation phase, oil prices will fluctuate with headlines, but with China's long holiday approaching, vigilance is needed after the holiday against a rebound and recovery if actual progress falls short of expectations, and positions should be held cautiously over the holiday. In the medium to long term, oil prices may trend downward in a volatile manner after the strait reopens. Demand for a ceasefire before the US midterm elections is gradually strengthening, while global crude oil demand enters its off-season in the fourth quarter, and the dampening effect of high oil prices on demand may continue to intensify. In addition, although the Strait of Hormuz has not been fully opened, there are persistent reports that Middle East oil exports are recovering, and it is necessary to consider whether countries already have relevant measures to cope with disruptions to oil transportation caused by the US-Iran situation. Over the longer term, the Gulf region has been forced by this round of geopolitical shocks to accelerate the construction of onshore pipelines and reduce dependence on the Strait of Hormuz. Meanwhile, the UAE's withdrawal from OPEC+, and the view of some countries within the organization, such as Iraq, that they need higher production quotas, increase the likelihood of competitive production increases among countries after geopolitical risks fade. The wartime shortage and possible post-war competitive production increases may push global crude oil from one extreme to another.
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