The recent escalation of hostilities between the US and Iran could upend the International Energy Agency’s (IEA) forecast of a significant oil market surplus next year, it says, as global supply jumped in June when the Strait of Hormuz reopened but still lagged pre-war levels.

Global oil supply rose by 4.1 million barrels per day (bpd) in June, the agency has said, but remained 9.4 million bpd below pre-war levels.

IEA predicts supply will expand by 7.5 million bpd next year, but this is contingent on improved Hormuz transits.

“An escalation in hostilities on 7-8 July, however, clouds the outlook and could upend the forecast that sees the market flipping to a surplus next year,” IEA has said.