Iran War Cuts Global Oil and Gas Supplies by Record Amounts

The ongoing war in Iran has created a perfect storm in energy markets, causing significant disruptions to global oil and gas supplies. The crisis is centered on the Strait of Hormuz, which accounts for approximately one-fifth of global oil consumption, with around 20 million barrels per day passing through this passage before the war.

The International Energy Agency (IEA) estimates that over 10 million barrels per day of Gulf production remained shut in August due to navigation restrictions, leading to a 1.6 million barrel per day decrease in global production and a 507 million barrel reduction in stocks since February.

The East-West Pipeline, also known as Petroline, was transporting between 4-5 million barrels per day but was forced to temporarily halt operations after a drone attack, threatening approximately 4% of the global oil supply. The pipeline connects producing areas of eastern Saudi Arabia with Yanbu on the Red Sea and is crucial for maintaining Saudi exports.

The Bab el-Mandeb strait, located between Yemen and the Horn of Africa, has also come under threat, with the Houthis increasing pressure on this route and threatening to attack Saudi ships. Maritime tracking data shows vessels continue to cross the strait, but the threat is raising transportation costs.