After a period marked by significant disruptions, the global crude oil market is transitioning from a shortage to a potential surplus, reshaping the landscape of energy supply and demand. The reopening of the Strait of Hormuz, a critical maritime chokepoint for oil shipments, signals a forthcoming increase in oil flows, though experts caution that a full return to pre-crisis levels may take several months due to fragile diplomatic agreements, logistical complications, and damaged infrastructure.

US President Donald Trump has asserted that oil will begin flowing from Friday, but analysts note that resuming operations at full capacity remains uncertain. Once stabilized, however, the supply is expected to grow considerably. The United Arab Emirates (UAE) has positioned itself to quickly increase output by over one million barrels per day (b/d), having taken advantage of recent tensions to exit the Organisation of the Petroleum Exporting Countries (OPEC) and maintain flexible production capacity. Additionally, Iran could restore about half a million barrels per day if sanctions are lifted, leveraging some of the world’s most productive oil reserves, with potential for further growth given adequate investment.

This surge in production will come amid an already oversupplied market. New projects scheduled for completion in Brazil, the US, and Guyana are forecasted to contribute an extra 2.8 million b/d by 2027, potentially pushing global oil output to approximately 108-109 million b/d, according to energy consultancy Wood Mackenzie.

On the demand side, the energy crisis has introduced downward pressure on oil consumption. While April’s reported loss of roughly 3 million barrels was mainly due to temporary delivery shortfalls to Asian countries, longer-term shifts are evident. Higher prices and concerns about supply stability have encouraged some consumers to draw on existing inventories rather than increase new consumption. China, a major driver of global oil demand, experienced a year-on-year contraction in retail sales in May—its first decline since the severe COVID wave of 2022—underscoring a potential weakening in underlying oil demand.

With production set to rise by an estimated 3 to 4 million b/d next year, market watchers anticipate a growing imbalance that could lead to a glut. This has raised concerns among oil-producing nations about downward pressure on prices. However, the dynamic may not be as dramatic as in previous crises. The Strait of Hormuz closure previously removed more than one billion barrels of oil from the global supply, much of which was offset by strategic and commercial reserve releases. Governments may now seek to replenish these stockpiles, which could help stabilize prices even amid rising output.

China’s reduction of oil imports by approximately 4 million b/d during the crisis played a crucial role in tempering price spikes, temporarily easing global pressure. Yet as consumption patterns adjust, the market faces a new equilibrium shaped by lessons learned during recent disruptions, emphasizing the importance of preparedness and strategic reserves moving forward.