Oil shock ‘largest supply disruption’ in history: IEA

The Mideast war “is creating the largest supply disruption in the history of the global oil market”, as Iran’s chokehold on regional supplies forces Gulf producers to slash production, the International Energy Agency said Thursday. In its latest market report, the IEA said crude production was currently down by at least 8.0 million bpd, with an additional 2.0 million related to petroleum products including condensates shut off. The conflict, which was triggered on February 28 by American-Israeli attacks on Iran, is hampering the global economy’s supply of oil and weakening production capacity.

The war has seen Iran tighten its chokehold on the Strait of Hormuz, through which a fifth of global crude passes, effectively all but shutting it down. IEA said current flows through the strait were moving at less than 10 percent of pre-crisis levels, which in 2025 were around 15 million barrels per day — with “no signs of a de-escalation in hostilities or a clear timeline for a recovery in flows through the Strait.” It stressed that a resumption of lows would be key in minimising the war’s impact on global markets. Against that backdrop, major European stock markets were off more than half of one percent in early morning trading.

In Asia, Japan’s Nikkei had shed one percent at the close while Hong Kong closed off 0.7 percent. A threat from Tehran to bring down the global economy overshadowed an impending record release of strategic crude by the IEA. On Wednesday it said said its 32 members had agreed to unlock 400 million barrels of oil from reserves — their largest release ever.

[paywall]

“The co-ordinated emergency stock release provides a significant and welcome buffer, but in the absence of a swift resolution to the conflict, it remains a stop-gap measure,” the IEA warned. The United States has proposed partially lifting sanctions against Russia in an attempt to offset the fallout from the squeeze on Hormuz, but Group of Seven nations Wednesday rejected the idea. Oil prices have gyrated since the crisis began, rising more than 30 percent to around $120 a barrel only to drop back.

[/paywall]