LONDON: The ongoing conflict in the Middle East has triggered the most significant disruption to global oil supplies ever recorded, the International Energy Agency (IEA) said Thursday a day after the agency approved an unprecedented release of crude from emergency reserves.
In its latest monthly market report, the IEA estimated that oil production in Gulf countries has fallen by at least 10 million barrels per day (bpd) due to the fighting. That reduction amounts to nearly 10% of global crude demand, underscoring the severity of the supply shock. The agency warned that, unless shipping routes are quickly reopened, losses could grow further.
Record Strategic Stock Release Underway
In response to the crisis, the IEA’s Governing Board agreed Wednesday to release 400 million barrels of oil from strategic stockpiles around the world the largest coordinated reserve drawdown in history.
IEA Executive Director Fatih Birol said the move has already “had a strong impact” on oil markets. Speaking from Istanbul, he described global energy markets as being in an “extremely critical period,” particularly following the closure of the Strait of Hormuz, a chokepoint through which a significant share of the world’s oil exports pass.
Birol said the decision was aimed at helping to stabilise markets amid one of the most acute supply disruptions since the 1970s. He did not provide details on the daily pace at which the reserves will be released.
The volume now authorised exceeds the 182 million barrels previously released by IEA members in 2022, after Russia’s invasion of Ukraine prompted emergency interventions.
Market Reactions and Geopolitical Tensions
U.S. President Donald Trump welcomed the IEA action, saying it would “substantially lower oil prices” amid the ongoing confrontation involving the United States, Israel, and Iran.
Tehran, however, warned that continued attacks on tankers and shipping near the Strait of Hormuz including incidents in Iraqi waters could drive oil prices as high as $200 per barrel. The IEA stressed that reopening key maritime routes and restoring production levels will be crucial to easing the disruption.
