August could become a critical turning point for oil prices if stronger demand collides with prolonged supply disruptions, Adnoc Executive Vice President for Sales and Trading Philippe Khoury said Monday.
As uncertainty surrounding a peace agreement persists, shipping activity through the Strait of Hormuz is unlikely to return to pre-war levels and will remain only partially restored, Khoury said at the Middle East Petroleum and Gas Conference in London.
"It's not going to resume like a flip of a switch," Khoury said, adding that some supply chains may take weeks to recover while others could require months after flows normalize.
A full return to pre-war operating conditions may not arrive until mid-2027, Khoury said.
That timeline aligns with Adnoc Chief Executive Officer Sultan Al Jaber's recent forecast that normal flows through the Strait of Hormuz may not resume until Q1 or Q2 2027.
After the US-Israeli conflict erupted on Feb. 28, Iran effectively shut a waterway that previously handled about one-fifth of global oil supplies, triggering what Khoury described as the largest energy supply shock in history.
Oil could remain near $100 a barrel if weaker economic conditions continue to suppress demand, although Khoury said it remains unclear how much further consumption can contract.
Khoury said oil prices may face upward pressure from August if stronger demand collides with continuing supply disruptions.
Europe is losing access to a major source of jet fuel as disruptions squeeze Middle Eastern exports that typically account for 40% to 45% of regional supply, while shortages have also spread across liquefied petroleum gas, chemicals, fertilizers, and sulfur markets, Khoury said.
Khoury said airlines that hedged jet fuel prices now face a different challenge, as supply shortages rather than costs threaten flight operations.
Chinese crude demand has started to recover after previously falling short of expectations, while India has remained one of the largest spot buyers during the crisis, he said.
Before Iran's closure of the Strait of Hormuz and US restrictions on Iranian ports created overlapping barriers to trade, China had imported large volumes of Iranian crude, Khoury said.
Khoury said Adnoc has restored much of its production and continues moving exports through a pipeline that bypasses the Strait of Hormuz.