The ongoing war in the Middle East has caused the largest oil supply disruption in history, the International Energy Agency (IEA) said on Thursday, as global markets grapple with rising tensions and halted shipping through the Strait of Hormuz.
According to the IEA’s latest monthly oil market report, Gulf countries have cut total oil production by at least 10 million barrels per day roughly 10 percent of global demand. The agency warned that without a rapid resumption of shipping flows, supply losses could grow further, intensifying pressure on world markets.
Oil prices surged sharply on Thursday as Iranian attacks targeted oil and transport facilities across the region, raising fears of prolonged conflict and widespread disruption to global energy flows.
Brent crude futures climbed US$5.95, or 6.5 percent, to US$97.93 a barrel at 0915 GMT, having earlier touched US$100. Meanwhile, U.S. benchmark West Texas Intermediate crude rose US$5.25, or 6 percent, to US$92.50 per barrel.
Earlier this week, Brent crude hit US$119.50, its highest level since mid-2022, before easing slightly after Donald Trump suggested that the Iran war could end soon.
The IEA announced a record release of 400 million barrels from strategic stockpiles in an effort to ease the supply shock. Analysts, however, caution that the impact may be limited, as the release is expected to span roughly 90 days, averaging 4.5 million barrels per day far short of offsetting the ongoing production losses.
“Market participants are watching closely, but the only way to see oil prices trade lower on a sustained basis is by getting oil flowing through the Strait of Hormuz,” said analysts at ING. “Failing to do so means that market highs are still ahead of us.”
Financial institutions are adjusting forecasts amid heightened uncertainty. Goldman Sachs expects Brent crude to average US$98 per barrel in March and April, falling to US$71 by the fourth quarter. In an upside-risk scenario, with a month-long disruption through the Strait of Hormuz, the March–April average could surge to US$110 per barrel.
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The escalation has included Iranian boats attacking two fuel tankers in Iraqi waters on Wednesday, setting them ablaze and killing one crew member, according to port authorities and maritime security firms. Projectiles had struck four vessels earlier in the Gulf, adding to fears of regional escalation.
In Lebanon, Hezbollah launched its largest rocket salvo of the current conflict, prompting Israeli strikes on Beirut. Analysts warned that the involvement of Yemen’s Houthis alongside Iran could further disrupt shipping in the Gulf.
Compounding the crisis, China imposed an immediate ban on refined fuel exports in March, aimed at pre-empting potential domestic shortages caused by the conflict.
The IEA said the current disruptions mark the most significant risk to global oil supply since records began, underscoring the dependence of international markets on stable Gulf production and secure shipping lanes.
Traders and governments are now weighing the combined impact of halted exports, geopolitical escalation, and limited emergency releases, with global energy security hanging in the balance.
Until shipping resumes and production stabilises, oil markets are expected to remain extremely volatile, and consumers could face sustained high prices for crude and petroleum products.
