IEA: Iran War Triggers Largest Oil Market Supply Shock in History

Cailian Press, March 12 (Editor: Xia Junxiong) Local time on Thursday (March 12), the International Energy Agency (IEA) released its monthly report stating that the Iran war is causing unprecedented turmoil in the global oil market, affecting about 7.5% of global oil supply, with a larger impact on exports.

In the report, the IEA said: “The Middle East war is causing the largest supply disruption in the history of the global oil market.”

The day before, IEA member countries agreed to release 400 million barrels of crude oil from emergency reserves to address market chaos. This is the largest coordinated action in history, more than twice the amount released after the Russia-Ukraine war in 2022.

However, this news failed to curb the rise in oil prices, with Brent crude briefly surpassing $100 per barrel on Thursday.

IEA member countries have not yet announced the specific pace and duration of the release. Although the U.S. announced it would release 172 million barrels from the Strategic Petroleum Reserve (SPR), fully releasing this amount would take about 120 days.

The most direct impact of the war on the energy market is the closure of the Strait of Hormuz, a critical energy transportation route, with oil and natural gas shipments nearly cut off.

Due to export disruptions, major oil-producing countries in the Gulf region have been forced to cut production. This means that even if the shipping lanes reopen in the future, the impact will persist for some time.

According to the IEA, global oil supply is expected to decrease by about 8 million barrels per day this month, totaling nearly 250 million barrels of oil supply reduction.

Transport through the Strait of Hormuz has also plummeted. The IEA cited data showing that last year, about 20 million barrels per day of crude oil and refined products were transported through the strait, but current throughput has dropped by over 90%.

The IEA stated that rising oil prices, flight cancellations, and economic uncertainty are also weakening oil demand.

The IEA has lowered its global oil demand growth forecast for 2026 by about 25%, to an adjusted 640,000 barrels per day. This is the lowest level since the agency first released its 2026 forecast in April last year.

The IEA warned that the actual closure of the Strait of Hormuz also threatens about 4 million barrels per day of regional refining capacity. Due to limited raw material supplies, other regions find it difficult to make up this gap, posing particular risks to diesel and aviation fuel supplies.

Before the crisis, the IEA had expected a record surplus of oil supply in 2026, driven mainly by increased production in the Americas, including the United States, Canada, Guyana, and Brazil.

(Cailian Press, Xia Junxiong)