Global oil market crisis following Middle East conflict

The International Energy Agency and OPEC released reports on Wednesday detailing significant disruptions in the global oil market due to the ongoing conflict involving Iran and the closure of the Strait of Hormuz. OPEC reported that its oil production fell by 1.7 million barrels per day (mbpd) in April, following a 7.9 mbpd decline in March, resulting in total production losses exceeding 9.7 mbpd since the conflict began in late February. Estimates from the IEA indicate that cumulative losses from Gulf producers have surpassed 1 billion barrels, with approximately 14 million barrels per day currently off the market. Global oil inventories reportedly dropped by 250 million barrels between March and April, equivalent to 4 million barrels per day. The IEA projects a supply deficit of 1.78 mbpd for 2026, warning that the market will remain under-supplied until at least the third quarter of 2026. Global demand forecasts for 2026 have been revised downward, with the IEA estimating a potential contraction of 420,000 barrels per day compared to pre-war predictions. While increased production in the Atlantic basin provides some relief, market stability remains highly dependent on the status of the Strait of Hormuz.