A recent outlook from Société Générale suggests that the current oil market disruption could be fundamentally different from past crises—and far slower to resolve.
Historically, oil shocks have typically been driven by supply loss. Events like the Iranian Revolution or the Iran-Iraq War removed barrels from the market, but recovery followed as other producers ramped up output or demand adjusted. This time, however, the issue isn’t just production—it’s logistics.
According to SocGen, the disruption—particularly tied to constraints around the Strait of Hormuz—has significantly impacted the movement of oil. An estimated 10 million barrels per day of supply was affected at one point, not because the oil doesn’t exist, but because it cannot move efficiently through global trade routes. Shipping delays, lack of war-risk insurance, and damaged infrastructure are all contributing to the bottleneck.
This creates a very different type of market dynamic. Instead of a sharp global shortage, the impact is unfolding in stages. Cargoes take longer to reach end markets, meaning shortages appear unevenly across regions. OECD countries have managed the situation better through inventory drawdowns and strategic reserves, while emerging markets—particularly in Asia—are facing tighter supply conditions.
Another key takeaway is timing. SocGen notes that past Middle East supply disruptions have taken an average of eight months to normalize. In this case, they expect a full recovery may not occur until the end of 2026.
From a market perspective, this has several implications. Oil prices are likely to remain elevated for longer, with SocGen raising its Brent forecast to $85 per barrel. More importantly, volatility could persist as the system works through logistical constraints rather than simply replacing lost production.
For the oil and gas industry, this environment reinforces the value of stable, accessible supply. Producers outside the Middle East—such as those in the U.S., Canada, and Brazil—could benefit from increased demand for more secure barrels. At the same time, midstream infrastructure, storage, and shipping capacity will play a more critical role than usual.
In short, this is not just a supply shock—it’s a system-wide disruption. And that means the path back to balance may be slower and more complex than markets are used to.
Author: phinds
