Ceasefire or not, the world is swimming in oil

AFTER THE WAR, the hangover. While hysteria about the closure of the Strait of Hormuz gripped the oil market for the last few days, the reality couldn't be more different: a wave of Persian Gulf crude was forming. Now, the swell is heading into a global oil market that's already oversupplied—hence Brent crude trading below $70 a barrel on Tuesday.

- JAVIER BLAS Bloomberg

The Northern hemisphere summer, which provides a seasonal lift to demand, is the last obstacle before the glut becomes plainly obvious. Oil prices are heading down—quite a lot. If anything, the Israel-Iran "12-Day War" has worsened the supply/demand imbalance even further—not just for the rest of 2025, but into 2026 too. On the demand side, geopolitical chaos is bad for business—let alone tourism. Petroleum consumption growth, already quite anaemic, is set to slow further, particularly in West Asia. But the biggest change comes from the supply side: The market finds itself swimming in oil.

Ironically, one of the countries pumping more than a month ago is Iran. Hard data is difficult to come by, as Iran does its best to obfuscate its petroleum exports. Still, available satellite photos and other shipping data suggest that Iranian production will reach a fresh seven-year high above 3.5 million barrels a day this month, slightly up from May. That bears repeating: Iranian oil production is up, not down, despite nearly two weeks of Israeli and American bombing.