Oil markets may face oversupply as Washington pressured to resolve Iran conflict

Brent crude has tumbled to around $87 per barrel after falling more than 7% in a recent session, a dramatic comedown from the $100 to $120 range it occupied earlier this year when the US-Iran conflict was at full boil. The Strait of Hormuz closure knocked an estimated 11 to 14 million barrels per day off global supply, roughly 14% to 20% of global oil trade. Now, with diplomatic efforts gaining traction and military strikes paused, the market is staring at the opposite problem: too much oil. From shortage to surplus in record time The US Energy Information Administration is projecting inventory builds of 2.7 million barrels per day in Q4 2026 and an even more dramatic 5.0 million barrels per day in 2027. That kind of supply glut would push Brent crude down to an estimated $70 per barrel by the fourth quarter and $65 per barrel next year. The February and March 2026 peak of the conflict saw supply losses that dwarfed previous disruptions. When the Strait of Hormuz, a chokepoint for roughly a fifth of the world’s oil, was effectively shut down, energy markets entered territory that most risk models had categorized as a tail event. Crypto’s oil problem During the sharpest oil price sp...