JERUSALEM (dpa-AFX) - Global oil supply is projected to plunge by 8 million barrels a day in March in the wake of the ongoing Middle East war, the IEA Oil Market Report says.
The war in the Middle East is creating the largest supply disruption in the history of the global oil market. With crude and oil product flows through the Strait of Hormuz plunging from around 20 mb/d before the war to very low volume currently, limited capacity available to bypass the crucial waterway, and storage filling up, 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, the Internatinal Energy Agency warned.
Global oil supply is projected to plunge by 8 mb/d in March, with curtailments in the Middle East partly offset by higher output from non-OPEC+ producers, Kazakhstan and Russia following disruptions at the start of the year. 'While the extent of losses will depend on the duration of the conflict and-disruptions to flows, we estimate global oil supply to rise by 1.1 mb/d in 2026 on average, with non-OPEC+ producers accounting for the entire increase,' says the report, published on Thursday.
The conflict is also having a significant impact on global product markets, with export flows through the Strait at a near standstill. Gulf producers exported 3.3 mb/d of refined products and 1.5 mb/d of LPG in 2025. More than 3 mb/d of refining capacity in the region has already shut due to attacks and a lack of viable export outlets.
32 IEA member countries unanimously agreed on Wednesday to release 400 million barrels of oil from their emergency reserves to the market to address disruptions stemming from the Middle East war. Global observed oil stocks were 8210 million barrels in January, their highest level since February 2021.
Oil prices have fluctuated wildly since the United States and Israel launched joint air strikes on Iran on February 28. 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 sent Brent futures soaring, close to $120 per barrel. Prices subsequently eased with Brent around $92/barrel, which is still up $20/barrel for the month.
Major supply reductions were reported by the Middle East oil giants - Iraq, Qatar, Kuwait, the UAE and Saudi Arabia.
Meanwhile, the suspension of flights at major airports in the Middle East, with a knock-on effect on hubs elsewhere, has materially reduced global jet fuel demand. Plunging LPG and naphtha supplies are already forcing petrochemical plants to cut their production of polymers, aggravating the loss of Gulf petrochemical flows.
LPG use in cooking and heating, especially in India and East Africa, is also at risk. More broadly, higher oil prices and a deteriorating economic outlook have begun to erode demand across the product spectrum. In this context, IEA has reduced its forecast for global oil demand growth in March and April by more than 1 million barrel per day on average, and for 2026 as a whole by 210 kb/d to 640 kb/d.
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