The International Energy Agency has delivered its starkest assessment yet of the global energy crisis triggered by the U.S.-Israel-Iran war, declaring in its March report that the conflict has created the largest supply disruption in the history of the global oil market — a statement with no historical asterisk attached.
The numbers justify the language. Before the war began on February 28, the Strait of Hormuz was handling approximately 20 million barrels per day of crude and product exports. It is now handling a trickle. Gulf countries have cut total oil production by at least 10 million barrels per day as storage tanks fill up and ships refuse to load. Global oil supply is projected to fall by 8 million barrels per day in March alone.
Brent crude futures surged to within touching distance of $120 per barrel in the immediate aftermath of the conflict’s escalation — a level not seen since the post-invasion spike of 2022. At the time the IEA published its report, Brent had eased to approximately $92 per barrel, still representing a $20 per barrel increase since hostilities began on February 28.
What 10 Million Barrels Per Day Actually Means
To put the scale of the disruption in context: the largest previous supply shock in oil market history — the Arab oil embargo of 1973 — removed approximately 5 million barrels per day from global markets. The current disruption is double that, and it is not an embargo. It is a physical impossibility to move oil through the world’s most important maritime chokepoint.
The IEA estimates crude production is currently being curtailed by at least 8 million barrels per day, with a further 2 million barrels per day of condensates and NGLs shut in. The countries bearing the largest production cuts are Iraq, Qatar, Kuwait, the UAE and Saudi Arabia — not because they have chosen to cut, but because their storage tanks are filling up with oil they cannot export and their ports cannot load ships that insurers will not cover and crews will not staff.
Saudi Arabia, which was producing 10.4 million barrels per day in February against a sustainable capacity of 12.11 million barrels, has effective spare capacity of 1.71 million barrels per day that it cannot currently bring to market. The UAE has 640,000 barrels per day of spare capacity sitting idle. Iraq has 360,000 barrels per day it cannot move. The oil exists. The exit route does not.
The Refining Collapse Nobody Is Talking About
Beyond crude production, the IEA flags a second crisis developing inside the first. Gulf producers exported 3.3 million barrels per day of refined products and 1.5 million barrels per day of LPG in 2025. Both flows have effectively stopped.
More than 4 million barrels per day of refining capacity in the region is now at risk — either shut due to attacks, closed for safety concerns, or being forced to cut runs because product storage tanks are full with nowhere to send output. Export-oriented refineries cannot function as export-oriented refineries when the export route is closed.
The products most vulnerable to extended disruption are diesel and jet fuel, where the IEA says limited flexibility exists elsewhere in the world to increase output quickly. This is precisely why jet fuel prices set an all-time record — $231.42 per barrel at the Singapore close on March 4, up 77.7% in a single session — and why China’s decision to suspend refined fuel exports has hit markets with such force. When the Gulf stops exporting refined products and China simultaneously withdraws from export markets, the global product supply equation does not have an easy solution.
LPG, Petrochemicals and the Cascade Into the Real Economy
The IEA’s report specifically flags LPG and naphtha supply disruptions as already forcing petrochemical plants to curb polymer production globally — aggravating the loss of Gulf petrochemical flows and creating supply chain stress in plastics, packaging and manufactured goods that will take months to fully appear in economic data.
For India and East Africa in particular, the IEA highlights LPG use in cooking and heating as directly at risk — a concern that has already materialised on Indian streets, where cylinder prices have crossed ₹913 in Delhi, induction cooktops are selling out nationwide, and airlines are seeking regulatory exemptions because their flights are too long to comply with crew hour rules.
The flight cancellations across Middle East airports have materially reduced global jet fuel demand — a rare piece of demand destruction that is partially offsetting the supply shock in product markets, though not enough to prevent record prices.
The Emergency Reserve Release: Significant But Not Sufficient
On March 11, IEA member countries unanimously agreed to release 400 million barrels of emergency reserves — an unprecedented coordinated action. Global observed oil inventories currently stand at 8.2 billion barrels, their highest level since February 2021, providing some buffer against the supply shock.
The IEA’s own assessment of the release is clear-eyed: it is a significant and welcome buffer, but in the absence of a swift resolution to the conflict, it is a stop-gap measure. ING’s analysis is even blunter — the release works out to approximately 3.3 million barrels per day of supply when spread over a standard 120-day drawdown period, well short of the 8 to 10 million barrels per day currently missing from global markets.
The IEA has revised global oil demand growth for 2026 down by 210,000 barrels per day to 640,000 barrels per day, reflecting both the direct demand destruction from flight cancellations and reduced industrial activity, and the broader economic deterioration that sustained high oil prices produce.
What Ends This
The IEA is explicit about what actually matters: the duration of disruptions to shipping through the Strait of Hormuz. Adequate insurance mechanisms and physical protection for shipping are identified as key to the resumption of flows. Without those two things — insurance that covers war risk at viable premiums and some form of physical security guarantee for vessels transiting — the Strait does not reopen regardless of what diplomats agree.
There is currently no ceasefire framework. The Trump administration is pressing for unconditional Iranian surrender. Iran is demanding conditions. The German Chancellor has publicly expressed concern about the absence of any exit strategy. Oil markets, having briefly seen Brent near $120, are currently pricing approximately $92 — a level that implies some probability of resolution but far from certainty.
The IEA has not used the phrase “largest supply disruption in history” lightly. It has data going back decades and has lived through 1973, 1979, the Gulf War, the Iraq invasion and the 2022 Russia shock. This one is bigger than all of them. And it is three weeks old.