Fear of an Oil Glut May Be Overblown, Top Consultancy Says - Energy | PriceONN
Up to 75% of the previous oil flows through the Strait of Hormuz are expected to return to the market by the end of the year, but significantly lower oil prices aren’t guaranteed for 2027 as the ongoing U.S.-Iran tensions are unlikely to be resolved for good soon, Fereidun Fesharaki, chairman emeritus of FGE NexantECA, told CNBC on Monday. Before the Iran war, the consultancy FGE NexantECA expected oil prices to be in the upper $50s low $60s per barrel next year. This could still be the case in...

Up to 75% of the previous oil flows through the Strait of Hormuz are expected to return to the market by the end of the year, but significantly lower oil prices aren’t guaranteed for 2027 as the ongoing U.S.-Iran tensions are unlikely to be resolved for good soon, Fereidun Fesharaki, chairman emeritus of FGE NexantECA, told on Monday.

Before the Iran war, the consultancy FGE NexantECA expected oil prices to be in the upper $50s low $60s per barrel next year. This could still be the case in 2027, but it rests on the assumption that a lasting peace will be reached, Fesharaki said.

Fesharaki said he personally sees as “impossible to imagine” a scenario in which the U.S. and Iran reach a lasting peace deal.

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“There will be more conflict, there will be more trouble, this is not the end of the story. This is the beginning of the story,” Fesharaki said.

In the near term, China will likely remain Iran’s top oil customer despite Tehran looking to pitch its oil to other Asian buyers, too, according to the energy expert.

Other analysts expect traffic through the Strait of Hormuz to normalize in the coming months and lead to a huge glut next year, which would depress oil prices.

Citigroup, for example, forecasts that Brent Crude prices could plunge to as low as $60 per barrel by the end of the year.

“We expect the MOU to hold and turn into a deal over the coming months as incentives to de-escalate outweigh the alternative for the US, Iran, and much of the ME region,” Citi’s analysts said in a note last week.

Other Wall Street banks have also started to predict a glut after the U.S. and Iran signed the MoU.

Morgan Stanley, for example, has slashed its oil price forecasts for the next 18 months as it expects the reopening of the Strait of Hormuz to accelerate a new supply glut.

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