How Iranian Oil Supply Moves Global Prices: Scenarios for 2027

How has Iranian oil supply moved prices in the past?

Iran's influence on the oil market rests on a large resource base. The US Energy Information Administration (EIA) describes it as holding some of the world's largest proved crude oil reserves and the second-largest natural gas reserves ^[1]. Its main export grades are medium sour. Iran Light (33.6° API, 1.46% sulphur) is similar in quality to Saudi Arab Light, while Iran Heavy is 29.6° API with 2.24% sulphur ^[1]. Three episodes show how Iranian oil supply has moved prices.

2012. Sanctions introduced in late 2011 and mid-2012 cut Iran's crude and condensate exports from about 2.5 million barrels per day (mb/d) in 2011 to about 1.5 mb/d in 2012, a fall of 39% ^[2]. Brent nonetheless averaged $111.67/bbl, almost the same as the $111.26 of 2011 ^[3]. World oil supply grew by about 1.8 mb/d that year ^[2], and US crude output rose by an estimated 780,000 b/d ^[3]. Supply growth elsewhere absorbed most of the Iranian loss.

2018–2019. In May 2018 the United States announced its withdrawal from the Joint Comprehensive Plan of Action (JCPOA) and the return of sanctions. Iran's exports peaked at about 2.7 mb/d in June and fell to 1.9 mb/d in September ^[4]. Brent reached $86/b on 3 October. When the sanctions took effect on 5 November, the US granted six-month waivers to some of Iran's largest customers, and higher Saudi output partly offset Iran's decline. Brent fell to $50/b on 24 December ^[5]. Iranian exports then stayed below 500,000 b/d for the rest of 2019 and most of 2020 ^[1]. In this episode the price rise came ahead of the full physical loss, and it reversed once waivers and spare capacity eased supply concerns.

What happened to Iranian oil exports and prices in 2026?

The war that began on 28 February disrupted exports across the Gulf, not only from Iran. Iran still exported about 2 mb/d of crude in March, according to Vortexa and Kpler estimates cited by Reuters ^[6]. The EIA estimates that crude production shut-ins peaked at 10.9 mb/d in May and were still 4.8 mb/d in September ^[8]. Iranian flows changed in steps. After a US–Iran memorandum of understanding in mid-June, Vortexa estimated that about 30 million barrels of Iranian oil were loaded between 15 June and 6 July, or 1.35 mb/d ^[9]. The United States reinstated its blockade of Iranian ports on 14 July. Reuters, citing Vortexa and Kpler, put August exports of crude and condensate at about 220,000–255,000 b/d ^[6].

Prices did not follow Iranian volumes alone. Brent fell below $80 on 16 June as the memorandum raised expectations of a wider Gulf recovery ^[10], and futures began the third quarter at $72/b on 1 July ^[11]. They passed $100/b on 23 July and peaked at $109/b on 15 September, when spot crude reached $132/b. The EIA linked the rise to renewed strikes, attacks on tankers, the blockade on Iranian exports and attacks on Saudi Arabia's East–West pipeline ^[11]. It expects Brent to average $105/b in the fourth quarter ^[8].

The 2026 record suggests the market treats Iranian supply mainly as part of total Hormuz flows. When Gulf exports recovered in June, prices fell although Iranian loadings stayed below their March level.

Through which channels does Iranian supply affect oil prices?

• Volumes. In 2025 Iran shipped 2.41 mb/d of crude and products through Hormuz, according to the International Energy Agency (IEA) ^[7]. The price effect depends on how quickly other producers or stocks replace lost barrels; in 2012 and 2018, rising supply elsewhere did much of that work ^[3,5].
• The sour-crude balance in Asia. China bought an average of 1.38 mb/d of Iranian oil in 2025, about 13.4% of its seaborne imports and more than 80% of Iran's shipments. Independent "teapot" refiners, which hold roughly a quarter of Chinese refining capacity, are the main buyers ^[12]. When Iranian supply falls, they compete for other medium-sour grades. In July, Shandong independents bought 16–20.5 million barrels of Qatari, Iraqi and UAE crude, their largest such purchases since the conflict began ^[9].
• Freight and insurance. An EU reinsurance ban that took effect in 2012 hit buyers relying on European insurers; the EIA expected South Korean and Indian refiners to be most affected ^[2]. In 2026 tanker rates reached record levels in September and ships took longer routes to avoid conflict zones ^[8], which raised the delivered cost of Gulf crude.
• Spare capacity. Higher Saudi output helped offset Iran in 2018 ^[5]. Before the war, the IEA put spare crude production capacity at over 4 mb/d, excluding sanctioned countries, mostly in Saudi Arabia ^[7]. In 2026 much of that capacity sits behind the same strait. Only Saudi Arabia and the UAE have working bypass pipelines, with an estimated 3.5–5.5 mb/d of spare capacity ^[7].
• Risk premium. In 2018 expectations moved prices before the physical loss ^[5]. Goldman Sachs expects persistent supply risks to keep near-term premiums elevated ^[13].

How does Iranian supply affect Dubai and regional differentials?

Dubai and Oman are the main price references for Middle East sour crude sold to Asia, so changes in Gulf sour supply show up first there and in the Brent–Dubai exchange of futures for swaps (EFS). In early March Reuters reported a Dubai cash premium of $19.63/bbl, the highest in its records dating from 2018, with Oman at $19.15 and Murban at $17.87. The EFS widened to $10.42/bbl, from 69 cents at the start of the year ^[14].

The June memorandum showed the reverse. Dubai and Murban moved into contango, a sign of ample prompt supply ^[10]. As other Gulf barrels returned, Iranian crude lost its price advantage. In July Iranian Light was offered at a $2–3/bbl discount to ICE Brent, while competing Middle East cargoes were offered at $5–8 below ^[9]. In January, by comparison, Iranian Light had been offered at about $8–10 below ICE Brent on a delivered basis to China ^[12].

Iranian supply therefore moves relative prices as well as the Brent flat price. More Gulf medium-sour crude would be expected to ease Dubai premiums; a renewed loss would tend to tighten them.

What do published scenarios imply for oil prices in 2027?

None of the outlooks we reviewed sets out a price scenario for Iranian exports alone; Iran is treated as part of the wider Gulf outlook. The cases below summarise published assumptions and are analysis, not predictions. A fuller comparison of bank forecasts is in our Brent price forecast for 2027.

Base case: gradual recovery. The EIA expects most Middle East production to return to pre-conflict averages by the end of the second quarter of 2027. It forecasts Brent at $87/b in that quarter, $74/b in the fourth and $84/b on average ^[8]. The International Monetary Fund (IMF) uses a futures-based average crude price of $87.39/bbl for 2027 and assumes Hormuz shipping recovers to pre-war levels between March and October 2027 ^[15].

More supply: de-escalation. The June episode offers a guide. Within days of the memorandum, Goldman Sachs cut its fourth-quarter 2026 Brent forecast by $10 to $80 ^[10]. Goldman's current downside case, with Gulf output 1 mb/d above February 2026 levels in 2027, puts Brent in the $60s ^[13]. Iran also has oil already at sea: Vortexa estimated Iranian crude afloat at 107 million barrels in late August ^[6]. In a de-escalation, part of that oil could reach buyers before any increase in production.

Less supply: prolonged disruption. Goldman's upside case, with Gulf output 5 mb/d below February 2026 levels, puts Brent at around $125 in 2027 ^[13]. In the IMF's adverse scenario, with the conflict unresolved by June 2027 and shipping through Hormuz and the Bab el-Mandeb effectively paralysed, oil could reach $130/bbl and return to baseline only in the fourth quarter of 2027 ^[15].

Iran's own range, from near-zero exports to about 2 mb/d, is smaller than the Gulf-wide gap in Goldman's upside case. It is concentrated, however, in medium-sour crude for Asian refiners, so it matters most for Dubai-linked prices.

What to watch

• Diplomacy and the blockade. Brent eased to $114.51 on 26 October as Qatari mediators travelled to Tehran ^[16]. Any change to the US blockade of Iranian ports would show up first in loadings data.
• Differentials. The Brent–Dubai EFS, Dubai cash premiums and Iranian discounts into China show whether medium-sour supply is easing.
• Gulf flows. Total Hormuz flows and the EIA's monthly shut-in estimates will show which scenario is unfolding ^[8].

Alupetra follows Iranian supply and its effect on crude benchmarks as part of its market analysis, and does not deal with sanctioned persons, entities or vessels.