Middle east: Escalating conflict in the Middle East threatens to cause the largest supply disruption in the history of the oil market, the International Energy Agency (IEA) said Thursday, adding that about 7.9 million barrels per day (bpd) of crude and 9.9 million bpd of total liquids could be shut in across Gulf producers in March,

According to Azerbaijan State News Agency, the war has severely disrupted energy shipments through the Strait of Hormuz, one of the world's most critical oil transit routes. Flows of crude and refined products through the waterway have plunged from around 20 million bpd before the conflict to only "a trickle," the agency reported.

With limited capacity available to bypass the chokepoint and storage facilities rapidly filling up, Gulf producers have cut total oil output by at least 10 million bpd. The agency warned that supply losses could deepen further if tanker traffic through the strait does not resume quickly.

In the absence of a swift recovery in transits through the Strait of Hormuz, and even with some flexibility from alternative export routes, about 7.9 million bpd of crude and 9.9 million bpd of total liquids could be shut in across Gulf producers in March, the agency estimates. "Global oil supply is projected to plunge by about 8 million bpd in March," the IEA noted, highlighting that production curtailments in the Middle East are expected to be partly offset by higher output from non-OPEC+ producers, including Kazakhstan and Russia following disruptions earlier this year.

While the scale of supply losses will ultimately depend on the duration of the conflict and the extent of disruptions to shipping flows, the agency still expects global supply to expand over the longer term. The conflict is also severely disrupting global refined product markets, with export flows through the Strait of Hormuz nearly at a standstill.

Gulf producers exported about 3.3 million bpd of refined products and 1.5 million bpd of LPG in 2025, according to the International Energy Agency. However, more than 3 million bpd of refining capacity in the region has already shut down due to attacks and the lack of viable export routes. Refineries in other regions are also expected to face constraints as feedstock availability tightens, the agency said.

To mitigate the impact of the disruption, IEA member countries unanimously agreed on March 11 to release 400 million barrels of oil from their emergency reserves to the market.