The world is about to have too much oil

By Douglas McIntyre  •  July 5, 2026
GANESH RAMSUMAIR Pexels

When the Strait of Hormuz was closed, and oil tankers were trapped at sea, oil prices rose above $140. They had not been that high since Russia invaded Ukraine. Now, just a few weeks later, those tankers, many of them filled with oil, are on their way to their destination. At the same time, the US is pumping a record amount of oil. OPEC+, in the meantime, is about to increase its output. China, the third player in this game, built reserves over many years and has never faced a worrying shortage. This means the import needs of the world’s largest crude importer are not very high. 

Referring to OPEC+, the FT reported, “The oil producing group has agreed in principle to increase quotas by 188,000 barrels per day ​from August, on top of similar increases for June and July, one OPEC+ source said ahead of the ​group’s meeting later on Sunday.” OPEC+’s output is so huge that it could affect the price of oil by itself 

US crude production is 13.81 million barrels per day, a record high. Much of this is because shale output is strong. Most of this comes from huge deposits in the Permian Basin. This sits in Western Texas and New Mexico.

In the meantime, oil demand has fallen, according to the IEA. Some is due to nations harmed by high oil prices, making adjustments to their use of crude. Many worry that another event that interrupts the flow of oil will drive prices higher again

WTI oil trades at $69. That is back to where it traded in February. In general, this is bad for the environment. The use of green energy began to rise due to fears that the supply shortage over the last three months would be permanent. It turned out it was not.

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