Mideast Gulf Conflict Disrupts Oil Supply, Impacts Global Demand
The ongoing conflict in the Mideast Gulf is causing disruptions to oil supply and fuel availability worldwide. As a result, demand for refined products has been impacted, leading forecasters to scale down their outlooks for global product consumption in 2026. The Strait of Hormuz, which handles approximately 15 million barrels per day of crude oil and 5 million barrels per day of refined products and LPG, was near-closed when the conflict started on February 28.
Refiners have reduced runs due to the strait's closure and other supply constraints. Mideast refinery runs are down around 1.3 million barrels per day year on year from March to August, according to Energy Intelligence data. Meanwhile, Ukrainian drones are disabling Russian refineries, turning a large exporter of key products like diesel into an importer. Russian runs are down by approximately 850,000 barrels per day on average in March-August and still falling.
Some refiners have managed to run at higher capacity, such as the US, which is producing 350,000 barrels per day more year on year. However, the overall impact of these disruptions on global demand remains limited for now, with forecasters citing uncertainty around the conflict's duration and other supply pressures.