The world is facing the largest oil supply disruption on record due to the Middle East war, according to the International Energy Agency (IEA). The agency has published a new report saying that global oil supply could fall by about 8 million barrels per day in March as shipping through the Strait of Hormuz remains blocked.
Major Gulf producers including Saudi Arabia, Iraq, Kuwait, Qatar and the United Arab Emirates have cut production by at least 10 million barrels per day as the conflict escalates.
To stabilise markets, the IEA has agreed to release a record 400 million barrels from strategic reserves, with the United States providing the largest share. However, the agency warned that oil production and shipping could take weeks or months to recover if the conflict continues.
As stated by the International Energy Agency:
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 a trickle 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.