Global Energy Supply Crunch Hits Record 2 Billion Barrels Amid Ongoing Middle East Conflict

More than five months after it started, the global energy supply crunch caused by the Middle East conflict has reached a critical point. The disruption, which began on February 28, has now surpassed 2 billion barrels, making it a semi-permanent issue that needs to be factored into both short-term and medium-term outlooks.

The crisis is centered around the Strait of Hormuz, a critical waterway through which crude oil, refined products, and other liquids are transported. Iran's leaders have been using this chokepoint as leverage to raise income, making it unlikely that energy flows will return to prewar levels anytime soon.

According to shipping data analyzed by Energy Intelligence, the conflict has led to an average 12.9 million barrel per day reduction in seaborne supplies of crude oil, products, LPG, and ethane since February 28. While a temporary opening of Hormuz after a peace memorandum between Washington and Tehran went into effect on June 17 helped mitigate the impact, the aggregate disruption has still exceeded 2 billion barrels.