The ongoing war in Iran has unleashed the largest supply disruption in the history of the global oil market, slashing output by 8 million barrels a day this month, or nearly 250 million barrels in total, according to the International Energy Agency (IEA).
The conflict’s epicenter is the closure of the Strait of Hormuz, a critical trade artery through which 20 million barrels of crude and products flowed daily last year. With flows now down by over 90%, Gulf producers like Saudi Arabia and the United Arab Emirates have been forced to shutter roughly 10 million barrels of daily production as export routes remain blocked. The IEA notes that even when the strait reopens, the ripple effects on supply chains will persist.
Brent crude surged past US$100 a barrel in London on Thursday following attacks on two tankers in Iraqi waters and the evacuation of Oman’s key oil export terminal. Ongoing assaults on commercial shipping since the war’s outbreak have compounded the chaos. The IEA also highlighted risks to 4 million barrels a day of regional refining capacity, straining global supplies of diesel and jet fuel as alternative feedstock remains scarce.
In response, IEA members—comprising 32 OECD nations—agreed to release an unprecedented 400 million barrels from emergency reserves. The U.S. alone will contribute 172 million barrels from its Strategic Petroleum Reserve, though full delivery could take up to 120 days.
The crisis has also dented demand, with the IEA slashing its 2026 global consumption growth forecast by 25% to 640,000 barrels a day, the lowest since projections began last April. Economic uncertainty, price spikes, and flight cancellations are key drivers of the downturn.
Some relief comes from non-OPEC producers and OPEC+ members like Kazakhstan and Russia, who have ramped up output. Swelling production from the Americas, including the U.S., Canada, Guyana, and Brazil, has also softened the blow. Still, the IEA cut its 2026 global surplus projection by over a third to 2.4 million barrels a day, a sharp reversal from pre-crisis expectations of a record glut.
The supply shock, representing 7.5% of global oil output, underscores the fragility of energy markets amid geopolitical strife. With Gulf production hobbled, the agency estimates the total loss this month could reshape trade dynamics for quarters to come.
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