Iran's war increases oil deficit expectations for 2026

A Reuters poll of analysts showed that the war in the Middle East has raised expectations of a global oil supply deficit of around 1.5 million barrels per day this year. However, the poll forecast that the recovery of crude flows from the Gulf, strong U.S. production, and weak Chinese demand would shift the oil market toward a supply surplus by 2027. Eight analysts surveyed by Reuters saw an average deficit of 1.5 million barrels per day in 2026, nearly double the deficit expected in a similar poll last April, which stood at 750,000 barrels per day. Despite this, the poll showed that the market is expected to see a surplus of 1.9 million barrels per day in 2027. Goldman Sachs maintained its forecast for Brent crude at $80 per barrel for the fourth quarter of 2026, noting that a decline in Middle East supplies would support prices if tensions between the United States and Iran ease by year-end. Goldman Sachs said its forecasts reflect price support from reduced Middle East production in the second half of the year, offset by downward pressure from stronger-than-expected output in the region in June and weak demand in China, South Korea, and the Middle East. The bank expects oil prices to retain most of their gains in July and August amid continued declines in global inventories, supported by lower Middle East production, increased summer travel demand, and slower drawdowns of strategic petroleum reserves by OECD countries. The bank maintained its forecast that average Brent crude prices will reach $75 per barrel and U.S. West Texas Intermediate crude $70 per barrel in 2027, assuming the Strait of Hormuz remains open.