Global Oil Shortages Worsen as Wars in Iran and Ukraine Continue
The ongoing wars in Iran and Ukraine have significantly exacerbated global oil shortages, with few signs of relief on the horizon. The conflict has resulted in widespread destruction to Middle Eastern energy infrastructure, including oil wells, refineries, pipelines, export terminals, and power plants.
According to J.P. Morgan, over 1.2 million barrels per day of oil refining capacity across the region is out of operation due to physical damage. The situation is further complicated by the fact that refining capacity has been severely compromised, with Goldman Sachs estimating a global refining deficit of 6.5 million barrels a day.
The impact of these shortages can already be seen in countries such as India and China, where people are struggling to find affordable cooking gas due to the closure of the Strait of Hormuz, which has cut off about 20% of the world's supply of liquefied petroleum gas. Other pressures on global oil supplies include seaborne drones launched by Ukraine in the Black Sea, which have temporarily blocked most crude oil exports from Kazakhstan.
Some countries are seeking to mitigate these effects by tapping into strategic oil reserves or shifting to renewable energy sources. For example, China has reduced its imports of crude oil and petroleum-related products by about 3.6 million barrels per day since the Iran war started, while Brazil's production is up 14% over 2025 levels.