Iran War Causes Largest Oil Supply Disruption on Record

The US-Israeli war on Iran has caused the largest oil supply disruption in history by daily output lost, but at least one earlier shock had a greater cumulative impact. The International Energy Agency (IEA) said the conflict is the worst energy crisis the world has faced, combined with the tail end of the European gas crisis caused by Russia's invasion of Ukraine in 2022.

The Iran war has simultaneously hit crude, natural gas, refined fuel, and fertilizer supplies, exposing new vulnerabilities created by decades of rising demand and deeper global trade links. Unlike earlier crises, this shock has affected multiple energy sectors at once.

The IEA estimates the peak supply loss from the current crisis stands at over 12 million barrels per day, equivalent to 11.5% of global oil demand. This is larger than earlier peak supply losses during the 1973-74 Arab oil embargo and the Iranian Revolution in 1978-79 combined.