WTI Crude Rallies on Iranian Tensions Despite Massive Global Surplus Forecast

The Strait of Hormuz Chokepoint

Approximately 20% of global petroleum consumption passes through the narrow Strait of Hormuz. Any impediment to this lane would flip the projected 3.2 million bpd 2026 surplus into a catastrophic deficit, forcing WTI into the $90 range in extreme scenarios.

US Production Slowdown

EIA forecasts suggest US crude production growth will slow to just 3% year-on-year in 2026 as low prices finally begin to curb drilling activity. This plateauing output is providing a counterweight to the massive non-OPEC supply growth expected from Guyana and Brazil.