Houlihan Lokey Cites 14 MMbpd Supply Gap, $40 B Oil Capital Seeking Deployment
HLI•Houlihan Lokey’s oil and gas head said the Iran conflict created a 14 million barrel per day supply gap and a one billion barrel aggregate deficit. He noted $40 billion raised last year is now seeking deployment while $30 billion of assets will launch in the second half of 2026.
1. Conflict Supply Gap
The ongoing Iran conflict has created a 14 million barrel per day supply gap that has drained strategic reserves and resulted in an aggregate one billion barrel deficit, indicating a severe under-supply in global oil markets.
2. Market Pricing Disconnect
Short-term oil trade has surged to 60 times physical volumes, double its March 2020 peak, revealing that futures markets are underpricing long-term risks around restoring Strait of Hormuz flows and restarting Middle Eastern production.
3. M&A Opportunity Surge
Upstream M&A is accelerating with over $40 billion of oil and gas capital raised in the past twelve months now seeking deployment and approximately $30 billion of assets slated to enter the market in H2 2026, creating a favorable seller’s market and advisory window.
