Rystad: Middle East oil supplies rebound quicker than expected, improving global outlook

Global oil markets are adjusting to a resurgence in Middle Eastern crude supplies following a preliminary peace agreement between the US and Iran. 

This, coupled with the US Treasury's decision on 22 June to defer Iranian oil sanctions until August 21, has also paved the way for a rapid ramp up of production. 

Thus, as producers across the Gulf restored output faster than expected, Brent crude fell to around $73 per barrel, while WTI teetered close to $70.

According to Rystad Energy, shut-in crude production in the region reached 9.6 million bpd, down from 11.7 million bpd, and the consultancy now expects output to return to prewar levels by the end of 2026, instead of Q1 2027. 

“Two million barrels a day came back online in three weeks, and the recovery is spread across the region,” said Aditya Saraswat, MENA research director at Rystad Energy.

Rystad also expects total regional outages to fall below 2 mbpd by the end of Q3 2026, as producers continue bringing fields back online ahead of earlier expectations.

The International Energy Agency also reported that shipments through the Strait of Hormuz rose in early June, thanks to “ship-to-ship transfers in the Gulf of Oman, lifting total flows from a May low of 9.6 mb/d to around 12 mb/d.”

The June 2026 Oil Market Report by the IEA also noted multiple ways in which markets responded to the crisis, helping keep oil prices below $150 per barrel:

• Global markets drew down inventories, while the IEA released its largest-ever emergency stock, bringing additional barrels to market. 
• Refineries across countries quickly made adjustments to make up for the decline in the region's refined product exports as well as the losses of Middle Eastern crude oil.
• China, the world's largest crude oil importer, cut its imports by 40% between February and May, helping ease supply pressures in the global market
• Crude exports from other suppliers, particularly the US, increased, while Gulf producers found alternative routes to avoid the Strait of Hormuz.

UAE and Saudi Arabia take the lead

Saudi Aramco resumed crude loadings at Ras Tanura on 26 June after a nearly four-month suspension, signalling another important step towards restoring Gulf exports.

Two Very Large Crude Carriers operated by Bahri were seen loading crude at the world’s largest oil export terminal, while another vessel waited offshore.

Saudi Arabia strengthened its position through extensive use of its East-West pipeline during the conflict, which links eastern oilfields to the Red Sea port of Yanbu. 

The UAE too depended heavily on the Habshan-Fujairah pipeline during the crisis, and is poised to double its capacity by next year.

Saudi Arabia along with the UAE emerged as the most resilient producers throughout the conflict, as they were able to maintain exports using infrastructure that bypasses the Strait of Hormuz. ​

Together, they account for around 65% of the crude still being produced across the region during the disruption. 

“Saudi Arabia is on track for a record 4.5 million bpd through Yanbu this month. The supply picture is clearly improving,” said Saraswat.

The IEA noted that a “full recovery [of oil flows through the Strait of Hormuz] will not be immediate, however, as mines will have to be removed from the main shipping lanes and supply chains will take time to normalise.”

In spite of this, companies such as ADNOC, Iraq's SOMO, Kuwait Petroleum Corporation, and QatarEnergy have all launched tenders for July cargoes. 

The Iran outlook 

​Iran, meanwhile, is recording the sharpest rebound. “Iran is moving fastest because its shut-in was shorter and upstream damage was limited,” explained Saraswat.

Due to easing sanctions, the naval blockade lifted, and shipping activity gradually resuming, Rystad estimates Iranian production could rise from approximately 2.4 million bpd today to 3.1 million bpd by August. 

If sanctions relief extend beyond August, production could climb to 3.3 million bpd by the end of the year, exceeding pre-conflict output.

Strait of Hormuz: the biggest uncertainty 

Despite the improving situation, concerns surrounding the Strait of Hormuz remain.

According to Saraswat, storage facilities across the Gulf are currently estimated to be only 50% to 60% full after producers relied heavily on inventories to maintain exports during the disruption. 

Unless tanker traffic returns to normal levels soon, producers may once again have to curb output as storage capacity fills, according to Rystad.

Although crude loadings and shipping activity have resumed, security concerns persist after a commercial vessel was struck by an unidentified object in the Strait of Hormuz this week, briefly reigniting fears over the durability of the ceasefire.

“The variable that will determine how quickly prices settle at a new level is Hormuz transit volumes,” Saraswat said, adding that “The diplomatic agreement is a necessary first step, and physical tanker flows through Hormuz are what we are watching now.”