By Kavya Balaraman and Anjana Anil
April 10 (Reuters) – The sharp hit to global oil production from the Iran war is poised to flip the oil market into a supply deficit this year, analysts say, a huge swing in forecasts that erases previous expectations of comfortable oversupply.
The conflict, which began on February 28 with U.S. and Israeli strikes on Iran, has effectively stalled flows through the Strait of Hormuz, a passageway for about a fifth of global oil consumption. Production shut-ins and attacks on energy infrastructure have also cut deeply into output.
Eight analysts polled by Reuters expect oil market demand will outpace supply by 750,000 barrels per day on average this year. A similar poll last September had predicted a 1.63 million bpd surplus for 2026, driven largely by OPEC+’s decisions to unwind some of its output cuts, and strong production from other producers like the U.S., Brazil and Guyana.
The International Energy Agency projected that the war had shrunk oil supply by around 11 million bpd as of the end of March, while ANZ bank estimated in an April 9 note that roughly 9 million bpd of crude supply had been effectively removed. Global oil supply was around 106.6 million bpd in January, according to the IEA.
These immediate shocks are expected to translate into an average production loss of 2.13 million bpd across the entire year, analysts said in the poll. They expect the market to see its steepest deficit in the second quarter – averaging around 3 million bpd – before tipping back into a surplus of 1.4 million bpd in the fourth quarter.
Analysts warn, however, that projected deficits could steepen depending on how long disruptions through the Strait of Hormuz persist.
Flows through the strait remain constrained, with traders reporting no clear signs yet of a sustained resumption in shipments since a ceasefire was announced on Tuesday.
An estimated 136 million barrels of crude oil and products are stuck in the Gulf due to the conflict, said Vikas Dwivedi, global energy strategist at Macquarie Group.
Clearing that backlog is likely to take time. Many shippers still face challenges in spite of the ceasefire, with reports of Iran planning to charge fees to ships transiting the Strait of Hormuz.
“Issues include insurance and the risk of violating sanctions (by) transacting with Iran if tolls are paid,” Dwivedi said.
RESTORING PRODUCTION EXPECTED TO BE BUMPY
Supply disruptions due to the war prompted the largest annual price forecast increase in Reuters poll records last month, with analysts lifting their 2026 Brent forecasts by around 30% to $82.85 a barrel. The war has boosted oil prices by about 50%.
Restoring oil production to pre-conflict levels will likely take months, depending on the extent of the damage sustained at oilfields during attacks and shutdowns, and on how freely shipping flows through Hormuz.
Even under a constructive security scenario, analysts at ANZ said output can only be partially recovered in the near term, with around 2 million to 3 million bpd potentially returning in the first month as export flows resume, and another 2 million to 3.5 million bpd potentially coming back into the market over the rest of the second quarter.
“However, operational friction, damaged infrastructure and export bottlenecks mean recovery is unlikely to be smooth,” they said.
There is also a chance that around 1 million to 2 million bpd of capacity may be permanently lost or limited even after the war, ANZ said, setting the stage for a tighter market and increased price volatility.
(Reporting by Kavya Balaraman and Anjana Anil; Editing by Nia Williams)
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