The Middle East war has erased around one billion barrels of cumulative crude supply from global markets in the three months since the first shots were fired.
That’s what Rystad Energy said in a market update sent to Rigzone on Tuesday, highlighting that this is equivalent to two and a half times the entire U.S. Strategic Petroleum Reserve.
“Cumulative losses have now reached one billion barrels and are on track to nearly double by year-end under our base case, which still assumes a narrow U.S.-Iran deal in June and a phased reopening of the Strait of Hormuz from mid-July,” Aditya Saraswat, Rystad Energy MENA Research Director, said in the update.
Saraswat warned in the update, however, that this base case is under pressure.
“Each additional month of conflict adds roughly 350 million barrels to cumulative losses, with a growing share that will never come back,” the Rystad representative warned.
Saraswat highlighted in the update that, “with 11.8 million barrels per day shut in across six Gulf producers, the conflict has become the most severe supply disruption in the modern oil era”.
“Despite a fragile memorandum of understanding between the U.S. and Iran that had raised hopes of a deal, both sides have since returned to air strikes, narrowing the diplomatic track and widening the tail risk of a prolonged shock,” Saraswat added.
In the market update, Rystad outlined that, even in its base case, “upstream recovery follows an S-curve rather than a snapback”.
“Tanker repositioning is the first bottleneck, pushing the initial production recovery two to three weeks behind the strait’s reopening, with July supply recovering just 10-15 percent of shut-in volumes,” Rystad said.
A stronger rebound is expected in August and September, according to the company, which projected that regional supply would rise to roughly 17.3 million barrels per day and 20.9 million barrels per day, respectively.
“Around 85 percent of lost volumes are expected to be restored by October, with the remaining recovery … extending into January 2027,” Rystad added.
The company highlighted in the update, however, that cumulative supply losses “are on track to reach nearly two billion barrels by year-end, even under this relatively constructive scenario”.
A statement sent to Rigzone by the Enverus team on Tuesday pointed out that, in a new report, Enverus subsidiary Enverus Intelligence Research (EIR) raised its second half 2026 Brent forecast to $110 per barrel, from $95 per barrel, “based on a scenario in which a U.S.-Iran peace deal is reached by end of June, allowing the Strait of Hormuz to begin reopening shortly thereafter”.
“The analysis notes the initial market reaction to a deal announcement could be bearish but maintains that underlying support comes from inventories that remain well below prewar levels,” the statement said.
This statement noted that EIR’s updated outlook assumes a more conservative ramp-up of flows through the strait that extends into the first quarter of next year, “with throughput modeled to recover from roughly ~two million barrels per day today and rise steadily to 16 million barrels per day by 2027 – still below the 20 million barrel per day prewar level”.
“Against this backdrop, cumulative stock draws are expected to keep OECD inventories near ~2.3 billion barrels through 2H26, a level the report’s stocks to price relationship implies is consistent with ~$110 per barrel Brent, alongside modeled ~500 million barrel per day Y/Y demand loss in 2026 from sustained price elevation,” the statement added.
The statement highlighted that, for 2027, EIR’s forecast calls for Brent to average $105 per barrel, “reflecting gradual normalization of flows but continued support from low stocks”.
Al Salazar, a director at EIR and author of the EIR report, said in the statement that “even with a path toward reopening, the Strait of Hormuz doesn’t snap back overnight and the market doesn’t get its inventory cushion back quickly either”.
“Our update is a ‘higher for longer’ call,” he pointed out.
“The headline may move first, but low stocks and a gradual normalization keep Brent supported well into 2027,” he said.
In a report sent to Rigzone by the Standard Chartered team late Tuesday, Standard Chartered Bank Energy Research Head Emily Ashford said there had been a renewed market focus on the return of Gulf barrels in the event of a lasting peace agreement, “with the media narrative suggesting a rapid return of supply”.
Ashford warned, however, that Standard Chartered Bank expects a lag between the repricing in commodities markets and physical supply recovery.
“Export constrained barrels could re-enter the market within weeks, but physical production recovery is likely to lag by several months, with some impaired for years, and some never returning,” Ashford said in the report.
“We expect 30-40 percent of lost supply to be available within the first few weeks, rising to 80-90 percent by a year,” Ashford highlighted.
“However, 10-20 percent will require multi-year remediation, with up to 10 percent permanently lost through reservoir degradation or economic abandonment,” Ashford warned.
In its latest Short Term Energy Outlook (STEO), which was released on June 9, the U.S. Energy Information Administration (EIA) projected that the Strait of Hormuz “will remain effectively closed in the near term”.
“In our forecast, oil shipments through the strait resume in the third quarter of 2026, however, we assume that it will likely take several months to ramp up to pre-conflict traffic, which we do not think will occur until early 2027,” the EIA said in its June STEO.
“We expect some oil production in the Middle East to remain disrupted beyond the Short-Term Energy Outlook forecast,” it warned.
Naeem Aslam, CIO at Zaye Capital Markets (ZCM), outlined in a market analysis sent to Rigzone on Wednesday that ZCM sees oil “trading inside a tense balance between supply disruption risk and diplomatic relief”.
“Prices are rising when the market focuses on U.S.-Iran tension, the Strait of Hormuz, blockade pressure, and tighter U.S. inventories, but they are capped when traders believe a deal can reopen flows and reduce the war premium,” Aslam highlighted.
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