International Energy Agency: The Global Oil Market Faces Its Most Severe Supply Disruption in History

This article is reprinted from [Xinhua News Agency];

Xinhua News Agency, Paris, March 12 (Reporter Cui Kexin) The International Energy Agency stated in its latest monthly oil market report on the 12th that, due to the ongoing tension in the Middle East, the global oil market is facing the most severe supply disruption in history. If shipping cannot be restored quickly, the global crude oil supply gap will further widen.

The report pointed out that the volume of crude oil and petroleum product transportation through the Strait of Hormuz has plummeted from an average of about 20 million barrels per day before the U.S.-Israel military strikes on Iran to a “very low level” now. Due to limited alternative shipping capacity for rerouting around key waterways and near-saturation of storage facilities, Gulf countries have already cut their total daily crude oil production by at least 10 million barrels. The report estimates that global daily crude oil supply will sharply decrease by about 8 million barrels in March.

The report said that the U.S.-Israel military strikes on Iran pose a significant impact on the global refined oil market, with over 3 million barrels of refining capacity in the Middle East already shut down daily. Due to raw material shortages, refining in other regions will also gradually face restrictions.

The report shows that since the U.S.-Israel attack on Iran, international oil prices have experienced sharp fluctuations. London Brent crude futures once rose close to $120 per barrel. In this context, member countries of the International Energy Agency unanimously agreed on the 11th to release 400 million barrels of strategic oil reserves to ease global supply tensions. Data shows that global crude oil and refined product inventories in January reached 8.21 billion barrels, the highest level since February 2021.

The report pointed out that releasing oil reserves is only a temporary measure. The ultimate impact of the U.S.-Israel-Iran conflict on the oil and gas markets and the overall economy depends not only on the intensity of military actions and the extent of damage to energy facilities but also crucially on the duration of the disruption of shipping through the Strait of Hormuz.