The war in the Middle East is causing the largest disruption to global oil supply in history, impacting 7.5% of worldwide supply and a significant portion of exports, according to the International Energy Agency.
Impact on Global Oil Supply
The IEA reported that its member countries agreed to release an unprecedented 400 million barrels from emergency reserves in an attempt to counteract the turmoil in oil markets. The conflict is creating the largest supply disruption ever recorded.
The most immediate impact stems from the closure of the Strait of Hormuz, a critical trade artery for oil and gas. This closure is forcing Gulf producers to cut output due to export limitations, eroding a global oil supply glut.
The IEA estimates a reduction of 8 million barrels per day in global oil supply this month, totaling almost 250 million barrels. Flows through the Strait of Hormuz, which handled 20 million barrels of crude and products last year, are down by more than 90%.
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