Barclays Warns of 13–14 Million BPD Oil Supply Drop Due to Extended Hormuz Disruption

• The disruption represents the largest geopolitical shock to energy markets since the 1990 Gulf War, affecting roughly 20% of global oil and LNG supplies with world demand at 104-105 million bpd
• Price scenarios: normalization by early April could mean $85/barrel Brent in 2026, but disruptions through end-April could push prices to $100, and through end-May to $110
• Supply response is structurally weaker than past crises due to under-delivering OPEC+ spare capacity and decelerating non-OPEC+ growth from years of under-investment

Barclays Warns of Major Oil Supply Disruption from Hormuz Strait Closure

Barclays issued a stark warning Thursday that a prolonged closure of the Strait of Hormuz could eliminate 13-14 million barrels per day (bpd) from global oil supply—a massive disruption representing roughly 13% of world demand. The International Energy Agency projects global oil demand at 104-105 million bpd for 2026.

Current Situation:

Iran has blocked the Strait of Hormuz, trapping approximately 20% of the world's oil and liquefied natural gas supplies. The conflict, now in its fourth week, represents the largest geopolitical energy shock since the 1990 Gulf War. Oil prices surged over 2% Thursday, with Brent futures trading at $104.36 per barrel and WTI at $92.23.

Price Scenarios:

Barclays' base case assumes traffic normalizes by early April, supporting an average 2026 Brent price of $85/barrel. However, if disruptions persist through end-April, prices could reach $100, and a worst-case scenario extending through end-May could push Brent to $110 per barrel.

Market Context:

The bank emphasized that tight spot fundamentals—not speculative trading—are driving price increases. Supply elasticity is structurally weaker than in previous crises, with OPEC+ spare capacity underperforming and non-OPEC+ growth, particularly from the U.S., decelerating due to years of underinvestment.

Alternative export routes from Yanbu and Fujairah have increased activity, though uncertainty remains around disruption duration. Ceasefire negotiations continue, with conflicting statements from U.S. President Trump and Iranian officials about prospects for resolution.

The crisis has already triggered sticker shock at gas pumps globally and prompted governments, including France, to prepare targeted measures addressing energy price spikes.