Momentary price spikes aside, the recent conflict and now uneasy ceasefire between Israel and Iran has done little to alter the trajectory of global oil markets, according to a new analysis by S&P Global Commodity Insights.
The latest update to the S&P Global Commodity Insights Global Crude Oil Markets Short-term Outlook finds that existing expectations remain largely intact—oil supply growth will outpace demand growth and lower oil prices.
“The underlying fundamentals of the global oil market remain profoundly unchanged,” commented Jim Burkhard, Vice President and Global Head of Crude Oil Research, S&P Global Commodity Insights. “OPEC+ members are continuing with the accelerated unwinding of production cuts. There will be more oil supply coming from the Middle East in July. Meanwhile, global demand growth remains weak. In other words, there is plenty of oil available.”
S&P Global Commodity Insights expects supply to outstrip demand by 1.2 million bpd in the second half of 2025 (contrary to the same period in 2024 when demand exceeded supply), followed by a surplus of 800,000 bpd for the entirety of 2026.
Annual global total oil (liquids) demand growth for 2025 continues on track to be the weakest since 2001—excluding the economic downturn during the 2008–09 financial crisis and the COVID-19 pandemic in 2020—at 870,000 bpd and 2026 demand growth is expected to be around the same level.
Base case projections expect Dated Brent prices to be in $50-$60 per barrel range (upper $40s to upper $50 per barrel for WTI) later this year and into 2026.
The U.S. remains on track to register its first year-on-year oil production decline in roughly a decade, with total U.S. crude oil and condensate production (including offshore) expected to fall 600,000 bpd from mid-2025 to the end of 2026.
“The price of oil and Wall Street remain the de facto regulators of U.S. crude production,” added Burkhard. “The onset of conflict in Iran briefly injected a fear premium into oil prices, and fresh uncertainties do remain. But the fundamentals are the fundamentals, and the oil price trend remains the same—downward.”
Even during the conflict, all signs continued to point towards more supply coming from the Middle East, not less, the analysis says.
OPEC+ countries started to visibly increase production, in keeping with their plans to unwind production cuts on an accelerated timetable. As of the middle of June, Saudi Arabian crude and condensate exports increased nearly 700,000 bpd, a level along the lines of its stated target for the month.
There is still more than 4 million bpd of unused production capacity in the Persian Gulf region.
And there is the (uncertain) possibility of additional Iranian supply coming to market should the peace hold and if trade and investment sanctions were to be eased or removed.
“A year or more into the future, could a focal point in the market be how much Iran could increase production rather than attempting to close the Strait of Hormuz or damage oil infrastructure in other countries? Perhaps,” added Ian Stewart, Associate Director, S&P Global Commodity Insights. “In the meantime, expect more oil supply from the Middle East, regardless.”
