IEA Warns Renewed U.S.-Iran Tensions Threaten Oil Market Stability

North Sea Dated prices plummeted to $68 per barrel by early July, a $31 drop from the previous month and the lowest valuation since January. This decline followed a temporary reprieve in the Persian Gulf, where the lifting of a U.S. blockade allowed millions of barrels of Iranian crude to reach global markets. In June, this surge helped global supply rebound by 4.1 million barrels per day, reaching 98.8 million bpd.

Despite the temporary influx of crude, the IEA warns that global output remains 9.4 million bpd below pre-war levels. Any long-term forecast for a market surplus is now contingent on a swift de-escalation of the conflict. While demand is showing signs of recovery—with projected annual declines narrowing to 1.7 million bpd in the third quarter—product markets remain strained. A widening disconnect between abundant crude supply and restricted refined products has pushed refinery margins to four-year highs, with diesel and gasoline cracks seeing particularly sharp increases.