Oil and gas industry expected surplus – but war brought shortage instead

Energy researchers recount how the International Energy Agency in 2023 projected a global oil surplus by 2028, a forecast that helped keep prices too low to justify new drilling and refining investment. No projection accounted for the Strait of Hormuz being nearly shut down, which happened in March 2026 after U.S. and Israeli strikes on Iran, since that route carries the bulk of Middle Eastern oil to world markets.

Strategic reserves offered only brief relief, and refilling them later may add to demand rather than ease it. Prices have since climbed, pushing up costs for gasoline, diesel, fertilizer, food and other goods, while the researchers note that major forecasts for 2035 oil demand already varied by 27.2 million barrels a day before any of this happened — a gap equal to roughly a quarter of current global consumption.

The report also traces how forecasting itself shapes investment: banks and companies commit money to wells and pipelines based on 10- and 20-year demand guesses that are, by the researchers' own account, closer to storytelling than measurement, with about 90% of recent production spending going just to offset aging fields rather than add new supply.

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