Will Oil Glut Hiding in Hormuz Bring Back $60 Per Barrel?

The unprecedented halt in global crude oil flows resulting from the U.S.-Iran war created dire supply risk for some emerging countries, but the global supply deficit of 7.6M barrels per day (BPD) at the disruption peak is turning into oversupply of roughly 2M.

The U.S. Energy Information Administration projects that the domestic crude benchmark, West Texas Intermediate oil, will peak this year at roughly $88 per barrel, and move back toward $74 into 2027.

At the peak of the crisis in the Strait of Hormuz, what kept oil prices, now near $70 per barrel, from hitting $150, was the release of strategic petroleum reserves in the U.S., Europe and Japan. In the near term, the United Arab Emirates (UAE) left the Organization of Petroleum Exporting Countries (OPEC) and could offer attractive pricing to gain market share, putting more oil in the market. Iraq, Kuwait and Iran, despite damaged infrastructure, all need to export oil. Looking further into the future, Venezuela has massive reserves likely to come back online as major oil companies invest after the U.S. intervention there.

If the Iran-U.S. peace deal holds, Middle East flows “are set to increase to roughly 15M BPD in July from 9.5M BPD in June,” according to a Eurasia Group estimate. And if the U.S.-Iran 60-day memorandum of understanding extends, and oil-shipping traffic recovers further, “crude flows are likely to recover to their prewar level of 18M BPD by September,” Eurasia Group estimates.

All that supply is likely to pressure oil prices.

While strategic reserve replenishment will absorb a burst of oil production, the likelihood of oversupply of roughly 2M BPD by September has emerged in Brent futures prices, Eurasia Group notes.

On the demand side, China and other oil-dependent nations are already seeking to diversify their energy consumption and needs. Eurasia Group notes that the direction of oil prices in the near term will depend on the pace of Chinese oil imports, which fell from 11M BPD to just 6M BPD, from December into June. This helped depress oil prices globally.

If oil prices stay in the $60-to-$80 band, as Eurasia Group expects, who benefits?

A handful of independent U.S. energy companies have rallied in recent days. Refiner Delek Holdings (DK) jumped 20% in the past week, and PBF Energy (PBF) is up 18% in the same period while Valero Energy Corp (VLO) is up 9%

Bank of America upgraded ExxonMobil (XOM) in mid-June, saying its integrated oil-and-gas exploration, production and refining business should hold up regardless of outcomes in Iran. Its shares are down nearly 2% over five days while fellow integrated oil giant Chevron (CVX) is down nearly 4%. Texas Pacific Land Corp. (TPL), which manages land, water and operations in the oil-and-gas Permian Basin fields in Texas, is up more than 12% after Chevron tapped it for a Microsoft (MSFT) power project in Texas. Texas Pacific may be a bellwether where artificial intelligence meets energy investing. It invested $50 million in Bolt, an AI infrastructure company headed by former Google (GOOGL) chief executive Eric Schmidt. With AI tentacles, and projects tied to the Permian basin, which is one of the hottest production areas in the United States, it may benefit as a handmaiden to domestic crude producers even if oil prices move lower.

On the flipside, publicly traded companies that transport oil on the high seas have tumbled along with the price of crude, with Frontline PLC (FRO) and Teekay Corp. (TK) each down around 15% over the past five trading days. The Breakwave Tanker Shipping ETF (BWET), which was the best-performing exchange-traded fund of 2026, is down about 29% over the past five days; shipping companies can do well in periods of strong demand, or constrained supply, because tanker rates can spike. Founder and managing partner John Kartsonas told Bloomberg April 13 that the Iran war extending into the Middle East is “the biggest geopolitical event of our lifetime for oil.” Over the past year? Brace yourself: BWET is up 1343%.

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