According to Rystad Energy, Middle East oil production is recovering faster than expected following the preliminary US-Iran peace agreement and the US decision to delay Iranian oil sanctions until August 21. Around 2 million bpd of shut-in production has returned within three weeks, prompting Rystad to bring forward its forecast for a full regional recovery to the end of 2026.
Saudi Arabia and the UAE have led the recovery by relying on export infrastructure that bypasses the Strait of Hormuz, including Saudi Arabia's East-West pipeline and the UAE's Habshan-Fujairah pipeline. Iraq, Kuwait, ADNOC, and QatarEnergy have also resumed marketing July crude cargoes.
Iran is expected to post the fastest production rebound due to limited upstream damage and easing sanctions. Rystad forecasts Iranian crude output to increase from 2.4 million bpd to 3.1 million bpd by August, with the potential to reach 3.3 million bpd by year-end if sanctions relief is extended.
Despite the improving supply outlook, the Strait of Hormuz remains the key uncertainty. Storage levels in the Persian Gulf are only 50–60% full, but any renewed disruption to tanker traffic could force producers to reduce output again. Oil prices have eased to around $73/bbl for Brent as supply recovers, though market stability will depend on the continued normalization of shipping through Hormuz.