IEA calls Middle East oil shock "the largest supply disruption in the history of the global oil market.”
The war in the Middle East is triggering what the International Energy Agency called "the largest supply disruption in the history of the global oil market” in its latest monthly oil report.
“The war in the Middle East is creating the largest supply disruption in the history of the global oil market,” the Paris-based agency said in the last update. It added that “Gulf countries have cut total oil production by at least 10 mb/d. In the absence of a rapid resumption of shipping flows, supply losses are set to increase.”
Michelle Wiese Bockmann, shipping and commodities analyst, said the figures pointed to an unprecedented shock to the global oil system. “We estimate that crude production is currently being curtailed by at least 8 mb/d, with a further 2 mb/d of condensates and NGLs shut in,” she said. “Major supply reductions are seen in Iraq, Qatar, Kuwait, the UAE and Saudi Arabia.”
The disruption is reverberating most strongly through Asia, the largest buyer of Middle Eastern crude shipped via the Strait of Hormuz. According to the IEA, China accounts for 37% of exports from the region, or more than 5.2 mb/d, followed by India at 14% or 2.1 mb/d, while Japan and South Korea each account for roughly 12%, or about 1.7 mb/d.
“At barely a week’s navigation from Hormuz, India’s exposure to lost supply will be the hardest to compensate for in the near term,” the IEA said, highlighting the Middle East Gulf supplied 40% of India’s 4.9 mb/d of crude imports in 2025. The disruptions are already spreading beyond crude. “LPG shortfalls have led to a cooking gas crunch in India, with two-thirds of the country’s LPG demand effectively blocked.”
Refined fuel markets are also tightening rapidly. Gulf producers exported 3.3 mb/d of refined products and 1.5 mb/d of liquefied petroleum gas in 2025, but more than 3 mb/d of refining capacity in the region has already shut because of attacks and a lack of viable export routes.
“That’s why transport fuel costs are rising faster than crude,” Wiese Bockmann said. “Not only will filling up your car cost more for a while yet, but airline tickets are going to skyrocket.”
The Strait’s closure is also forcing export-oriented refineries to cut runs as storage tanks are filled. “More than 4 mb/d of refining capacity is at risk,” according to the IEA.
Despite the supply shock, global inventories remain elevated. The IEA estimates “global observed inventories of crude and products are currently assessed at more than 8.2bn barrels, the highest level since February 2021”.
Even if the waterway reopens soon, the logistics of restarting flows could take time. The agency cited obstacles including maritime insurance, seafarers’ refusal to work in a war zone and the challenge of co-ordinating dozens of vessels through the narrow channel without a governing authority.
“The consequences will ripple through for months,” Wiese Bockmann said. “Shut-in upstream production will take weeks and, in some cases, months, to return to pre-crisis levels depending on the degree of field complexity and the timing for workers, equipment and resources to return to the region.”
No comments:
Post a Comment