Six months into Iran war, almost half of global oil flows from war zones

• Current Gulf oil disruption stands at 5-7 million barrels per day, with Saudi Arabia re-routing oil to the Red Sea and Gulf exporters finding alternatives to the Strait of Hormuz
• Global refining capacity has been cut by about 10%, with Ukraine targeting Russian refineries as far as 2,700 km from Ukrainian territory, forcing Russia to ban gasoline and diesel exports
• The IEA has released record volumes from emergency stockpiles to cushion the supply shock, but those releases are now largely complete even as global inventories continue to decline

Summary: Global Oil Crisis Reaches Historic Proportions

Key Developments:

Six months into the Iran conflict, countries affected by war zones now produce approximately 45 million barrels per day (bpd), representing over 43% of global oil supply—marking the largest oil supply crisis on record. The situation has no clear resolution in sight.

Multiple Conflict Zones:

• U.S. and Israeli attacks on Iran (initiated six months ago) are the primary driver
• Russia-Ukraine war continues disrupting production and refining, including in Kazakhstan
• Ongoing Libyan conflict and U.S. restrictions on Venezuelan exports add further pressure
• Over 10% of global refining capacity is offline

Current Supply Impact:

Current Gulf disruptions range between 5-7 million bpd, according to analyst estimates. Saudi Arabia has re-routed oil through the Red Sea, while Gulf exporters navigate challenges around the Strait of Hormuz. Ukrainian drone strikes have targeted Russian refineries as far as 2,700 km from Ukrainian territory.

Market Consequences:

• Global fuel inventories are running low despite record IEA emergency stockpile releases (now largely depleted)
• U.S. diesel prices hit record highs even with refiners at peak capacity
• Russia has banned gasoline and diesel exports due to domestic shortages
• Higher fuel prices are driving inflation and increasing government borrowing costs
• The world has become increasingly reliant on U.S. oil supplies, though these face occasional weather-related disruptions

Outlook:

The crisis eclipses previous energy emergencies, with risks to total oil flows remaining elevated and no clear end to multiple overlapping conflicts affecting production and refining infrastructure globally.