The global oil market has entered one of its most volatile periods in modern history, as the war in the Middle East and the disruption of traffic through the Strait of Hormuz trigger shocks to supply, demand, refining and trade flows.
According to the latesy Oil Market Report by the International Energy Agency, the conflict has already removed nearly 13 million barrels per day (mb/d) of oil supply from global markets since February, while demand is now expected to contract for the first time in years.
The IEA describes the situation as an unprecedented supply shock, warning that mounting inventory losses and continued uncertainty over the Strait’s reopening could keep oil markets under severe strain well into 2027.
At the center of the crisis is the Strait of Hormuz, the narrow maritime chokepoint through which a fifth of global oil trade normally passes. More than ten weeks after the outbreak of war, tanker traffic remains restricted, reducing exports from Gulf producers including Saudi Arabia, Iraq, Kuwait, Qatar and the United Arab Emirates.
The IEA estimates cumulative supply losses from Gulf producers have already exceeded one billion barrels.
Global oil supply fell another 1.8 mb/d in April to 95.1 mb/d, leaving output 12.8 mb/d below pre-war levels. Gulf production alone was down by 14.4 mb/d compared with February levels.
The agency expects global oil supply to decline by an average of 3.9 mb/d in 2026, reaching 102.2 mb/d for the year.
The sudden supply disruption has driven extraordinary price volatility. North Sea Dated crude traded within a $50-per-barrel range in April, surging to $144 per barrel before retreating below $100 and rebounding again. Average prices rose by approximately $16.50 month-on-month to $120.36 per barrel.
