Russian Supply Disruptions, Iran Sanctions Tighten Global Oil Market

Ongoing attacks on Russian oil infrastructure and impending U.S. sanctions on Iran are applying new pressure to global crude supply, factors that could provide support for Bakken producers facing a forecasted market surplus next year. According to analysis from Rystad Energy, Russia's oil industry is running out of capacity to absorb further shocks, with crude production forecasts being revised downward.

Rystad Energy has revised its 2026 Russian crude production forecast to an average of 8.95 million barrels per day (bpd), a decline of 90,000 bpd from its previous outlook, according to a report from OilPrice.com. The firm further expects output to fall to around 8.6 million bpd in 2027. The decline reflects continued disruptions at export terminals and rising risks to seaborne exports, exacerbated by Ukrainian drone attacks that are now constraining the upstream sector in addition to refineries.

The attacks have led to significant refining cuts, with runs in June and July among the lowest in two decades. Rystad forecasts refinery throughput will average around 4 million bpd from July to December, nearly 30% below the 2016-2023 seasonal average. This has created a surplus of crude that the export system cannot consistently handle, forcing faster and deeper production cuts at the field level as onshore storage inventories reach critical levels. Separately, Rigzone reported that several Russian regions are again facing fuel shortages following the resumed attacks.

Concurrently, the United States is preparing to escalate financial pressure on another major producer. The U.S. will soon unveil "unprecedented sanctions" on Iran as part of a 'one-two punch' that includes a continued blockade of Iranian ports, Treasury Secretary Scott Bessent said, according to Rigzone.

For Bakken operators, these concurrent disruptions to Russian and Iranian supply act as a counterweight to a looming global surplus. Rystad Energy projects a global oil surplus in 2027, which is expected to pressure benchmark prices. However, the escalating constraints on Russian production and new limits on Iranian exports could mitigate the depth of that surplus or slow its arrival, supporting the price of Bakken crude blends relative to global benchmarks.

The situation underscores the continued importance of geopolitical risk in global oil markets. While the long-term forecast suggests lower prices, the immediate tightening from these events may benefit North Dakota producers and royalty owners in the near term. The state's output, which is heavily influenced by the economics of West Texas Intermediate (WTI) pricing, often finds support when global supply shocks reduce the discount between inland U.S. crude and international waterborne grades.