Oil futures suggest buyers seem to expect tight supply well into 2027 as the Iran war drags on. Diesel shortages are worsening, and the IEA is releasing emergency inventories to fill the gap.
The war with Iran might even extend into next year, and that means higher oil prices for a longer time. The ICE Brent crude futures contract for January 2027 trades at $102.59 per barrel, according to Oilprice.com.
Futures curve stays elevated into 2027
The June 2027 contract is only slightly lower, at $92.71 per barrel, and the December 2027 contract trades at $84.75. In December 2025, by comparison, Brent traded at less than $70 per barrel.
Back in March, most observers seemed to expect prices to retreat fast. Now, those who use oil seem to expect supply to stay tight, and they are hedging their future consumption at higher prices.
Reports that Gulf flows recovered to pre-war levels did not keep prices down for long. Recovery depends on costly maneuvers such as ship-to-ship transfers, which have tightened the tanker market and pushed up freight costs, while Iran is striking tankers in the Strait of Hormuz on an almost daily basis.
Diesel shortage pushes IEA to release stocks
Refined fuels look even tighter. Many Middle East refineries became targets of Iran's retaliatory strikes, so diesel flows have not recovered the way crude flows have.
The International Energy Agency said this week it will begin releasing more than 20 million barrels of diesel from collective inventory. The total diesel release could reach 50 million barrels. However, such releases will run out sooner or later, and replenishing them will be difficult given the shortage of refining capacity.
The IEA still appears to believe peace is a matter of time. In its latest monthly report, the agency expects global oil supply to rebound to 108.3 million barrels daily, from less than 101 million barrels daily this year.
Growth forecasts face energy cost pressure
Higher energy costs would keep inflation pressure on the global economy for longer than hoped, and central bankers and governments are getting nervous. The International Monetary Fund said this week the global economy could expand by 3.4% next year, but its chief economist warned that resilience is reaching its limits.
Source: Oilprice.com
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