The imminent reopening of the Strait of Hormuz ends the recent oil shortage, but analysts warn a surplus is already forming. UAE can crank up over a million barrels per day instantly, while a sanction‑free Iran could add another 500,000 b/d. Trump’s promise of “oil will flow” may mask months of logistical bottlenecks.

Wood Mackenzie projects new projects in Brazil, the United States and Guyana to lift global output to roughly 108‑109 million barrels daily by 2027, adding 2.8 million b/d. Combined with the rapid Middle‑East boost, excess supply could reach 3‑4 million barrels. Meanwhile, demand has softened: China cut imports by about 4 million b/d during the crisis and its retail sales slipped in May, hinting at lingering consumption weakness.

The oversupply risk pressures producers to reconsider pricing strategies and reserve policies. Governments may rebuild strategic stockpiles after the strait’s closure drained over 1 billion barrels. Investors should watch how oil majors adjust capital spending as the market shifts from scarcity to glut.