Conflict-Driven Shortage Wrecks Global Oil Supply Chain
The world's oil companies were expected to produce more oil than people wanted to buy by 2028, according to the International Energy Agency's prediction in 2023. This led to a drop in oil prices due to oversupply. However, no one anticipated that the Strait of Hormuz would be nearly blocked in 2026 following U.S. and Israeli attacks on Iran.
The sudden shortage caused by the conflict was not accounted for in any forecast, leading to a massive increase in oil prices. This, in turn, resulted in fuel shortages and price hikes across various sectors, including gasoline, diesel, fertilizer, food, and consumer goods.
Experts have highlighted that forecasts matter because they guide investments in new wells, refineries, tankers, and pipelines. For years, the most influential forecasts pointed towards slowing demand, leading banks to become wary of funding oil and gas projects.