International energy chief: No ‘credible pathway’ for prices to normalize in 2027

The head of the International Energy Agency (IEA) has a sobering warning regarding the world’s oil markets and prices for everyday fuel products: “I don’t see any credible pathway that 2027 will be a year of normalization.” In other words, Americans should buckle up to pay high prices at the pump for another year.

IEA Executive Director Fatih Birol expressed concern that overlapping conflicts in the Middle East will not be resolved, and that the threat of shutting off shipping through the Strait of Hormuz will remain, during a Tuesday industry conference in London, first reported by CNN . Download the Straight Arrow app today to get the stories that matter free from manipulation, bias or agenda.TM Point phone camera here Traffic of oil tankers through the Strait has fluctuated throughout the war with Iran but has not recovered to pre-war levels when 20% of the global oil supply passed through the Strait.

Strait traffic this week remains below the pre-war average. Even if it were to fully open, Birol suggested that the war has dashed the world’s confidence that the Strait of Hormuz can be relied upon. “It can be closed again,” he said.

Worldwide oil market determines how much Americans will pay to fill up a tank of gas. The global price benchmark for oil, Brent, has mostly lingered above $100 per barrel since September, with the average U.S. gas price well above $4 per gallon. High fuel prices are driving inflation as Americans’ affordability concerns take center stage ahead of the election.

And Birol’s comments are part of a growing chorus that’s saying the pain at the pump won’t let up anytime soon. ‘Overlapping crises’ The oil supply problem is not confined to Iran and the Strait of Hormuz. “I’m very worried that there will be some overlapping crises in the Middle East,” Birol said.

“It may further escalate the situation, which will have serious implications for energy markets.” The region has already experienced conflicts on multiple fronts that have rocked global oil markets in the past months. Advances by Houthis against both Saudi Arabia and the internationally-recognized government of Yemen have raised the prospect that the Bab al-Mandab Strait at the mouth of the Red Sea could be weaponized similarly to the Strait of Hormuz.

Saudi Arabia was able to quickly restart its east-west pipeline after an attack in September. The pipeline allows the region’s highest oil-producing state to bypass Iran’s hold on the Strait of Hormuz. As a result, total oil exports from the Middle East have rebounded to surpass pre-war levels, according to The Wall Street Journal .

Nevertheless, data suggests the increasing volatility in the region is driving up prices. Before the war, shipping costs were roughly $3 per barrel of oil. Now it’s up to $20, according to a Goldman Sachs Commodities Research report shared on social media.

The rising risk premium for sending oil near a war zone accounts for $7 of the $17 hike, with increased maritime fuel costs contributing another $4. Birol isn’t alone in his prognosis that the path to “normalization” remains far off. The Dallas Fed Energy Survey for the third quarter of 2026 found a majority of industry executives expect the market instability to extend into the second half of next year.

Fewer than half of the executives said they expect “normal levels” of crude exports from the Persian Gulf before the third quarter of 2027. The survey shows 11% expect a return to normal during Q3 and 15% during Q4. Another 21% said exports will not return to normal until 2028 or later.

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