Oil Supply Recovery May Not Trigger Price Collapse, Experts Say
The tl;dr
A major energy consultancy expects up to 75% of oil flows through the critical Strait of Hormuz to return to the market by year-end, easing concerns about a major crude glut. However, analysts don't expect a sharp price drop in 2027, with oil likely to stay in the $50s to low $60s per barrel as long as U.S.-Iran tensions persist.
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30-day · delayedKey points
- FGE NexantECA expects three-quarters of disrupted oil shipments through the Strait of Hormuz to resume by end of year, reversing a historic supply loss from Iran-related tensions.
- Even with restored flows, oil prices are forecast to remain in the upper $50s to low $60s per barrel in 2027, challenging assumptions that supply normalization means much cheaper oil.
- Geopolitical risk remains the key variable: U.S.-Iran tensions are unlikely to fully resolve soon, which would continue supporting prices despite higher supply.
- Global oil stocks have been depleted during the supply disruption, creating both a cushion against immediate gluts and a risk factor if demand weakens unexpectedly.
By the numbers
A prominent energy consultancy is pushing back against dire warnings of an oil price crash, arguing that while supply will recover significantly next year, geopolitical risks will keep a floor under prices. The Strait of Hormuz, through which about one-third of the world’s seaborne oil passes, saw major disruptions tied to U.S.-Iran tensions. As that situation stabilizes even partially, roughly three-quarters of the lost flows should come back online by the end of 2025, easing immediate supply fears.
But here’s the catch: restoration of supply does not mean cheap oil. Fereidun Fesharaki of FGE NexantECA told CNBC that prices are still likely to sit in the upper $50s to low $60s per barrel through 2027, roughly where analysts expected before the crisis. The reason is simple: the tensions between Washington and Tehran aren’t going away anytime soon. As long as geopolitical risk remains elevated, traders will demand a premium in the oil price to hedge against future disruptions.
The supply side also has a wrinkle. Global crude inventories have been drawn down significantly during the disruption, which actually helps absorb returning supply without triggering a glut. However, it also means there’s less buffer if demand suddenly drops or supply shocks hit elsewhere. The bottom line is that while panic over a price collapse may be premature, stability is not the same as the pre-crisis baseline.
Oil price forecasts shape decisions across energy, transportation, manufacturing, and consumer spending, so clarity on whether supply recovery will crash or stabilize prices helps investors and policymakers plan ahead.
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Topics
- oil prices
- iran tensions
- strait of hormuz
- supply disruption
- crude markets
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