Oil prices experienced a decline on Thursday, influenced by reports of a potential deal between the United States and Iran aimed at resolving the conflict in the Middle East. Simultaneously, the International Energy Agency (IEA) issued a forecast indicating a significant supply surplus expected in the coming year.
International benchmark Brent crude futures for August saw a decrease of 2.83%, settling at $77.30 per barrel. U.S. West Texas Intermediate futures for July also fell, dropping 3.20% to $74.33 per barrel.
Supply Glut Forecasted by IEA
The International Energy Agency anticipates that a lasting resolution to the ongoing conflict could lead to substantially increased supply volumes, potentially creating a major oil overhang in 2027. According to the IEA’s latest monthly oil market report, global supply is projected to drop by an average of 3.9 million barrels per day in 2026, reaching 102.4 million barrels per day. This is followed by a recovery to 110.3 million barrels per day next year, before a significant overhang emerges in 2027.
“Our first look at 2027 balances shows a significant overhang emerging next year,” the IEA stated in its report.
Market Reactions and Inflation Concerns
While lower oil prices could potentially mitigate the risk of energy costs contributing to broader inflation, market observers caution against complacency. A report from New York Life Investment Management noted that this situation does not represent “an all-clear.” The report highlighted that oil prices remain above pre-conflict levels, the normalization of shipping operations will require time, and both inventories and strategic reserves still need to be replenished.
President Donald Trump reportedly indicated to reporters that he might resume attacks on Iran if the country failed to adhere to its commitments under any potential agreement. “We’re going to bomb the hell out of them if they violate the agreement,” Trump was quoted as saying at a press conference. “I don’t want them to. I want them to honor the agreement.”
Mitchell Landsberg is the senior reporter for News Raise and focuses on Technology. Mitchell regularly writes about social media platforms and how influencers, industry and general people use them to communicate and make money.
