US-Israeli War on Iran Sparks ‘Largest Supply Disruption in History of Global Oil Market’: IEA
“The oil market challenges we are facing are unprecedented in scale,” said the executive director of the International Energy Agency.
Fire breaks out at the Shahran oil depot after US and Israeli attacks, leaving numerous fuel tankers and vehicles in the area unusable in Tehran, Iran on March 8, 2026.
(Photo by Hassan Ghaedi/Anadolu via Getty Images)
Jake Johnson
Mar 12, 2026
COMMON DREAMS
The International Energy Agency said Thursday that the US-Israeli war on Iran and its reverberating impacts across the region have sparked “the largest supply disruption in the history of the global oil market,” with flows of crude and other fossil fuel products through the Strait of Hormuz plummeting and Gulf nations slashing production as they run out of storage space.
The agency noted in its monthly report on the state of the global oil market that “oil prices have gyrated wildly since the United States and Israel launched joint airstrikes on Iran on 28 February,” pointing to “disruptions to Middle Eastern supplies due to attacks on the region’s oil infrastructure and the cessation of tanker traffic through the Strait of Hormuz,” which have “sent Brent futures soaring, trading within a whisker of $120/bbl.”
The IEA’s report came a day after the agency’s 32 member nations—including the US—agreed unanimously to release a total of 400 million barrels of oil from their emergency reserves to “address disruptions in oil markets stemming from the war in the Middle East.”
“The oil market challenges we are facing are unprecedented in scale, therefore I am very glad that IEA member countries have responded with an emergency collective action of unprecedented size,” said the agency’s executive director, Fatih Birol.
The IEA assessment on Thursday came as oil prices surged again as Mojtaba Khamenei, Iran’s new supreme leader, vowed to keep the Strait of Hormuz closed. An estimated 20% of the world’s oil passes through the route each year.
Earlier on Thursday, Iraq—which has among the largest confirmed reserves of crude oil in the world—suspended all of its oil terminal operations after two vessels were attacked off the nation’s coast. NPR reported that Iran “took responsibility for attacking one of the tankers, which it said was owned by the US.”
The US and Israel have also bombed Iran’s oil infrastructure, choking Tehran with black smoke and spraying toxic rain that prompted warnings from the World Health Organization (WHO).
“The black rain and the acidic rain coming with it is indeed a danger for the population, respiratory mainly,” WHO spokesperson Christian Lindmeier told reporters in Geneva earlier this week.
Heba Morayef, Amnesty International’s regional director for the Middle East and North Africa, said Wednesay that “the potential for vast, predictable, and devastating civilian harm arising from strikes targeting energy infrastructure, including uncontrolled deadly fires, major disruptions to essential services, environmental damage, and severe long-term health risks for millions, means there is a substantial risk such attacks would violate international humanitarian law and in some cases could amount to war crimes.”
“Regardless of whether a military objective is cited to justify targeting energy infrastructure, under international humanitarian law all parties have a clear obligation to take all feasible precautions to reduce civilian harm and refrain from attacks that cause disproportionate death or injury to civilians or damage to civilian objects,” said Morayef. “This includes any foreseeable knock-on, indirect adverse effects on civilians’ life and health, such as exposure to toxic chemicals.”
IEA Approves Record Oil Reserve Release, Keeping a Lid on Prices
On Wednesday, IEA members approved a record-setting coordinated release of 400 million barrels from global reserves, helping to keep an expected increase in Brent crude prices to just five percent. Brent closed at $92 per barrel, well under the $100 benchmark and far short of the $120-per-barrel levels it approached briefly on Monday.
The continued increase in pricing reflects market expectations that the Strait of Hormuz will remained closed, pending major geopolitical or military developments. The effective shuttering of the waterway has bottled up about 15 million barrels of supply (net) out of a total global oil trade of 100 million barrels a day, creating immediate problems for the region's producers. Iraq, Kuwait and Saudi Arabia have all throttled back production to match their respective export and storage capabilities; the UAE is expected join next with well shut-ins as early as next week, according to analysts at Societe Generale.
To reduce its exposure, Saudi Aramco has maximized use of the East-West pipeline, sending an additional four million barrels per day of Saudi crude overland to its Red Sea terminal at Yanbu. More than two dozen tankers have rerouted from the Gulf to Yanbu to meet the supply at the new location - but Yanbu's lower rate of loading at the pier will limit its near-term capability. At present Yanbu is achieving just 2.2 million bpd, compared to the 7 million bpd potential of the East-West pipeline.
The White House has urged tanker owners to make the run through the strait and resume unescorted operations to and from the Gulf, but several factors continue to deter shipping. The first is the continuing risk to crewmembers: three ships were hit overnight Tuesday, resulting in one major casualty and three missing personnel. The second is the cost of insurance, reported to be running as high as one to two percent of hull value for a Gulf voyage. The third is the absence of naval escorts, which the U.S. Navy has told owners it will not provide because it considers the risk too high.
The IEA reserve release was intended to reassure the market and keep oil price increases within tolerable limits, but a protracted closure is expected to result in rising costs for energy consumers. Iran's Islamic Revolutionary Guard Corps - the most powerful political force within the country - has stated that this is its objective.
"You [the U.S. government] will not be able to artificially lower the price of oil. Expect oil at $200 per barrel," an IRGC spokesperson said in a statement Wednesday. "The price of oil depends on regional security, and you are the main source of insecurity in the region."
Energy executives and analysts have predicted severe disruption in the event of a protracted closure, lasting well after the strait reopens. Repositioning tankers, restarting shut-in oil wells and rebooting shuttered refineries will take time, and unwinding the effects of the crisis will not happen overnight.
Aramco Chief Executive Officer Amin Nasser warned in an earnings call this week that there "would be catastrophic consequences for the world’s oil markets" if the shutdown persists.
"While we have faced disruptions in the past, this one by far is the biggest crisis the region’s oil and gas industry has faced," Nasser warned.
Neil Atkinson, the former chief of oil at the International Energy Agency, told CNBC this week that the world faces a "game-changing and unprecedented energy crisis" in the event of a long shutdown in the strait - especially as production gets shut in at an increasing number of oil fields. While he declined to predict future prices in round numbers, he said that "the sky is the limit."
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