Fereidun Fesharaki, chairman emeritus of FGE NexantECA, argues that expectations of a significant oil glut in 2027 are premature. While roughly 75% of pre-conflict oil flows are expected to return through the Strait of Hormuz by year-end, the underlying geopolitical friction between Washington and Tehran continues to pose a risk to supply stability. Fesharaki dismissed the possibility of a definitive peace deal, characterizing the current situation as the start of a longer period of volatility.
Geopolitical friction clouds oil market recovery
Persistent U.S.-Iran tensions threaten to keep crude prices higher than market analysts anticipate, defying predictions of a supply-driven collapse. While the Strait of Hormuz may see a return to normal traffic, the fragile diplomatic environment suggests that any lasting peace remains a distant prospect for the global energy sector.
Contrasting this view, major financial institutions like Citigroup and Morgan Stanley have adjusted their outlooks downward, anticipating that the reopening of the Strait will trigger a price collapse. Citigroup analysts suggest Brent Crude could fall to $60 per barrel, banking on a successful transition from the current memorandum of understanding to a comprehensive agreement. Despite this, China—Iran's primary customer—remains cautious, with a lack of aggressive purchasing currently keeping global markets in a state of uncertainty.
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