International Energy Agency (IEA)

Podcast Episode: The Mounting Disruptions in Oil Markets

The IEA’s latest oil market report highlights the seismic shock to global oil flows after the Strait of Hormuz was effectively shut in late February. The narrow 54‑km passage, which normally carries about 20 million barrels a day of crude, condensate, refined products and LPG, saw transit plunge by roughly 90%, leaving only 2.3 million barrels per day moving through the waterway. Analysts estimate the March supply disruption amounted to a historic 10.1 million barrels per day, the largest single‑month shortfall on record. Bypass routes, chiefly Saudi Arabia’s east‑west pipeline and the UAE’s Haban Fuja port, lifted to 7.2 million barrels per day but remain far short of pre‑conflict levels. Refining in the Gulf is down about 6 million barrels per day, tightening product markets and pushing crude benchmarks up two‑thirds, while gasoline, diesel and jet fuel prices have surged 50‑95%. The episode also underscores logistical bottlenecks: roughly 200 fully‑laden tankers and 150 empty vessels are stranded, Iraq’s southern ports hold only three days of storage, and India reported a 12.5% drop in LPG consumption in March. Prices for crude have jumped dramatically, and downstream fuels have followed, amplifying consumer cost pressures worldwide. If the strait remains closed into May, the IEA projects a 1.5 million barrel‑per‑day reduction in 2026 supply, with longer‑term risks if attacks on infrastructure persist. The disruption forces refiners to seek alternative crude sources, strains petrochemical feedstocks, and heightens volatility across energy markets, underscoring the strategic vulnerability of a single chokepoint.