The International Energy Agency (IEA) has indicated that oil supply disruptions in the Gulf region will significantly depress global oil demand until crude shipments through the Strait of Hormuz gradually return to normal; the agency projects that the daily increase in crude oil supply will rebound to 8 million barrels by 2027.
The Paris-based energy watchdog stated that the provisional US-Iran agreement expected to be signed this week marks the most significant breakthrough in negotiations since the conflict began, but a full restoration of crude shipments through this critical waterway is still anticipated to take several months.
Representing Western nations and their allies, and influenced by high oil prices and large-scale supply disruptions, the agency has revised down its full-year global oil demand forecast: global daily crude oil demand is now expected to fall by 1.1 million barrels this year, compared to a previous forecast of a 420,000-barrel decline.
As crude trade flows normalize, oil prices decline, and economic prospects improve, the agency expects the daily increase in crude oil demand to rebound to 2 million barrels next year.
In its latest monthly report released on Wednesday, the IEA stated: "While details of the agreement remain to be clarified and several disagreements are unresolved, these consultations are an encouraging development. However, a full recovery in transportation will not happen overnight, as mines in the main shipping lanes need to be cleared and the entire supply chain requires time to repair."
Iran's crude oil exports have been the most severely impacted by US sanctions, with daily exports plunging by 1.4 million barrels to just 230,000 barrels per day.
Ship-to-ship transfers in the Gulf of Oman have partially offset the export shortfall. This method of transport is often used to conceal the origin of cargo, with transfer volumes surging significantly in May and reaching a peak of 1.8 million barrels per day in early June.
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