Iran War Triggers Global Oil Supply and Demand Contraction

The recent Iran war has significantly impacted global oil supply and demand forecasts, according to the International Energy Agency (IEA). The agency now predicts a contraction in both supply and demand from last year. In its monthly oil market report, the IEA stated that the war has 'thoroughly upended' the global outlook for oil consumption.

The IEA's revised forecast indicates an 80,000 barrels per day (bpd) drop in demand growth this year, down from a 640,000 bpd rise predicted earlier. This is due to the largest oil supply disruption in history, caused by attacks on Middle East energy infrastructure and the effective closure of the Strait of Hormuz.

The agency warns that resuming flows through the Strait of Hormuz remains critical to easing pressure on energy supplies and prices. The IEA's base case forecast assumes regular deliveries of oil and gas from the Middle East will resume by mid-year, but below pre-conflict levels.