Iran War Shocks Global Oil and Gas Markets with Biggest Supply Disruption
The Iran war is disrupting global oil and gas supply chains, causing significant price increases. Oil prices have jumped since the US and Israel began their strikes on Iran, with traders rattled by disruptions to exports and energy infrastructure across the Persian Gulf.
The Strait of Hormuz, a narrow waterway that handles around a quarter of global seaborne oil trade and a fifth of liquefied natural gas supply, has seen a near-halt in tanker traffic. Oil producers in the region, including Saudi Arabia, are reducing output as storage fills up in onshore tanks and vessels at sea.
The International Energy Agency says the war is causing 'the largest supply disruption in the history of the global oil market.' The agency's members have agreed to release more than 400 million barrels of crude and oil products into the market from their emergency reserves, but this will only cover a portion of Gulf supply that's being lost each day.
Asian buyers are turning to US barrels as Gulf oil supply is squeezed, while Russian crude is also being snapped up by Indian refiners after the Trump administration temporarily eased sanctions on cargoes already at sea. The supply of refined petroleum products has been disrupted as well, with prices increasing for diesel, gasoline, jet fuel, shipping fuel, naphtha, and more.