Middle East conflict triggers ‘largest’ oil supply disruption in global market — IEA

The International Energy Agency (IEA) says the ongoing war in the Middle East has caused what it describes as the largest oil supply disruption in the history of the global market.

In its March oil market report, the agency said shipments of crude oil and refined products through the Strait of Hormuzhave dropped dramatically. Before the conflict began, about 20 million barrels per day (bpd) of oil passed through the vital shipping route, but flows have now slowed to almost a halt.

According to the IEA, the disruption has forced Gulf countries to significantly cut production. The agency estimates that oil output in the region has been reduced by at least 10 million bpd due to the inability to transport crude through the key waterway and the limited capacity of alternative export routes.

“The war in the Middle East is creating the largest supply disruption in the history of the global oil market,” the IEA said in the report.

The agency added that if shipping through the Strait does not resume quickly, the supply shortfall could worsen.

The IEA estimates global oil supply will decline by around 8 million bpd in March. However, part of the loss is being offset by higher output from non-OPEC+ producers such as Kazakhstan and Russia, which have increased production after earlier disruptions this year.

Despite the current crisis, the agency projects that global oil supply will grow by about 1.1 million bpd on average in 2026, with the increase expected to come entirely from producers outside the OPEC+ alliance.

The conflict is also disrupting global fuel markets. The IEA noted that exports of refined petroleum products from Gulf producers have nearly stopped as shipments through the Strait of Hormuz remain severely restricted.

In 2025, Gulf countries exported approximately 3.3 million bpd of refined products and about 1.5 million bpd of liquefied petroleum gas (LPG). However, more than 3 million bpd of refining capacity in the region has already shut down due to attacks and the lack of viable export routes.

The agency warned that refineries in other parts of the world may also struggle to maintain operations as crude supplies tighten.

To ease the market pressure, IEA member countries agreed on March 11 to release 400 million barrels of oil from their emergency reserves to help stabilise global supply amid the ongoing disruptions.