From 20 mn barrels a day to a trickle: IEA says Hormuz closure is biggest oil supply disruption ever

The International Energy Agency (IEA), in its March report released on Thursday, warned that the war in the Middle East is causing the largest oil supply disruption in history, with crude and oil product flows through the Strait of Hormuz plummeting to a fraction of normal levels. 

Also read: Iran’s new Ayatollah says Hormuz must remain closed

The IEA’s report reveals that the once-bustling waterway, responsible for nearly 20 million barrels per day (mb/d) of global oil shipments, has seen exports fall to a trickle, with Gulf countries cutting oil production by at least 10 mb/d.

Also read: ‘It can’t happen now’: US Navy not ready to escort oil tankers through Hormuz

“The war in the Middle East is creating the largest supply disruption in the history of the global oil market,” the IEA stated, noting that Gulf producers have already reduced production by 10 mb/d, and this could worsen in the absence of a rapid resumption of tanker traffic through the Strait. 

The IEA projected global oil supply to fall by 8 mb/d in March alone, as the conflict’s impact reverberates across the industry. While some non-OPEC+ countries, including Kazakhstan and Russia, have increased output to offset these losses, the net effect is a significant shortfall in global supply.

The closure of the Strait of Hormuz, a key chokepoint for global oil trade, has also triggered a near standstill in export flows from the region. More than 3 million barrels per day of refining capacity in the Gulf has already been shut due to attacks or infrastructure damage, further straining global markets. 

“Disruptions are not limited to upstream production and exports,” the IEA added, highlighting significant setbacks in refining and gas processing as well.

As part of efforts to mitigate the effects of the supply disruptions, IEA member countries agreed on Wednesday (March 11) to release 400 million barrels of oil from their emergency reserves. The coordinated action is the largest in the agency’s history and aims to cushion the blow to global economies, which have been dealing with the fallout from the conflict and soaring oil prices. 

Despite this, the IEA stressed that the release is a stopgap measure, as the long-term stability of global oil markets will depend on the resolution of the conflict and the resumption of safe shipping routes through Hormuz.

The IEA’s report also notes a significant reduction in global oil demand growth, adjusting its 2026 forecast downward by 210,000 barrels per day to 640,000 barrels per day. The global economy faces additional risks as high oil prices and supply chain disruptions continue to have a ripple effect across industries, including transportation and petrochemicals.