The global oil market is facing unprecedented turbulence due to geopolitical conflicts, supply disruptions in the Strait of Hormuz, and volatile prices.
Understanding the current global oil market landscape
The global oil market has entered one of its most turbulent phases in recent years following the outbreak of war between Iran, the United States, and Israel. According to the latest Oil Market Report from the International Energy Agency (IEA), the conflict has caused the largest disruption to oil supplies in the history of the global market, with immediate effects on production, prices, and demand.
The crisis is primarily linked to the blockage of traffic in the Strait of Hormuz, one of the planet’s main energy corridors. Before the war, approximately 20 million barrels per day of crude oil and petroleum products transited through the strait, but today flows have almost ceased.
The consequences are already evident. Gulf countries have cut production by at least 10 million barrels per day, while Brent prices have fluctuated violently, reaching close to 120 dollars per barrel before falling back to around 92 dollars.
To stabilize the market, in recent days, IEA member countries decided to make available 400 million barrels from strategic reserves, an emergency measure that is part of the energy security policies already analyzed in this in-depth study on IEA oil reserves.
Why the Strait of Hormuz is crucial for the global oil market
The most critical point of the crisis concerns the Strait of Hormuz, through which a huge share of global energy exports passes. Before the outbreak of the conflict, approximately 20 mb/d of crude oil and refined products transited through the strait. Today these flows are almost completely blocked.
The suspension of traffic has generated a domino effect along the entire oil supply chain. Many tankers can no longer load cargo at Gulf ports, and local storage tanks are rapidly filling up. Consequently, several producers have begun to reduce or suspend production.
The IEA estimates that crude oil production has currently been reduced by at least 8 million barrels per day, in addition to approximately 2 million barrels per day of condensates and NGLs halted. The most significant cuts concern Iraq, Qatar, Kuwait, the United Arab Emirates, and Saudi Arabia.
However, it’s not just about upstream production. Several refining and gas processing plants have been shut down due to attacks or for security reasons. Furthermore, the closure of the strait has forced many export-oriented refineries to drastically reduce operations, as petroleum product tanks are becoming saturated.
But global oil demand is revised downwards
The Middle East crisis is also affecting global oil demand. The IEA reports that the cancellation of numerous flights at airports in the region and transportation difficulties are reducing aviation fuel consumption.
At the same time, the availability of some petroleum products is decreasing. Supplies of LPG and petrochemical naphtha are rapidly declining, forcing several petrochemical plants to reduce polymer production.
The contraction in supplies also has social consequences. LPG used for cooking and heating, very common in India and East Africa, could face severe restrictions.
In light of this scenario, the Agency has revised downwards its demand growth outlook. In March and April, global consumption could decrease by over 1 million barrels per day compared to previous estimates.
Annual prospects are also changing. For 2026, the IEA now forecasts demand growth of 640 thousand barrels per day, which is 210 thousand barrels per day less than estimates made just a month ago.
In February, the agency estimated an increase in global demand of 850 thousand barrels per day, mainly supported by non-OECD economies and the growth of the petrochemical sector.
What is the role of global oil stocks in the crisis
In a context of strong instability, global oil stocks become an essential tool to limit the effects of market disruptions.
According to IEA estimates, observed global stocks of crude oil and petroleum products currently amount to over 8.2 billion barrels, the highest level recorded since February 2021.
Approximately half of these stocks are located in OECD countries. Of these, 1.25 billion barrels are held directly by governments as strategic emergency reserves. Additionally, 600 million barrels are held by the industry but subject to government storage obligations.
To mitigate the economic impact of the crisis, IEA member countries decided on March 11 to make available 400 million barrels from strategic reserves, which will be released to the market through various emergency measures adopted at the national level.
This is an intervention of extraordinary scope, but the IEA emphasizes that it remains a temporary measure. Without a rapid reopening of maritime routes in the Strait of Hormuz, the impact on the global oil market could become even deeper.
Why oil prices have become so volatile
The new geopolitical framework has had an immediate impact on oil prices. After the joint air attacks against Iran on February 28, energy markets reacted with strong fluctuations.
Supply disruptions from the Middle East and the blockage of tankers in the Strait of Hormuz pushed Brent futures to rise rapidly, reaching close to 120 dollars per barrel.
Subsequently, prices partially corrected, stabilizing around 92 dollars per barrel, still about 20 dollars higher than at the beginning of the month.
In the February report, published before the military escalation, the situation appeared very different. At that time, the market was mainly influenced by geopolitical tensions and some temporary production disruptions, with Brent around 70-73 dollars per barrel.
The new Middle East crisis has therefore completely changed the landscape of the global oil market, transforming a scenario of relative stability into one of the most complex in recent years.
Journalist with over 20 years of experience, he has covered politics, economics, current affairs, and culture throughout his career. He has served as Editor-in-Chief and Managing Director for a publishing house that produces general-interest magazines in Italy, Germany, the USA, and China. He has written for and collaborated with companies and media outlets in the automotive sector, with a strong focus on sustainable mobility. His involvement in the energy world began as a press officer for multinational corporations in the sector. Since then, he has consistently covered topics related to the energy transition, especially in the automotive field, and renewable energy, contributing to La Repubblica, AdnKronos, 9 Colonne, and The Post International. He is also passionate about technology, computing, photography, and cooking, and has a background as an LGBTQIA+ activist.
