Oil Markets Under Growing Strain as Middle East Disruptions Persist

Global oil markets are facing renewed pressure as disruptions to Middle East exports persist. The International Energy Agency (IEA) warned that if Gulf oil supplies remain constrained, higher prices and further reductions in demand may be needed.

Oil production and exports from the Gulf have been heavily restricted since the start of the conflict six months ago. Oil flows through the Strait of Hormuz averaged just 7.6 million barrels per day (mb/d) in August, about 13.1 mb/d below pre-war levels.

The IEA estimates that non-Gulf producers have added a cumulative 420 million barrels, equivalent to approximately 2.3 mb/d of additional oil supply, since the beginning of the conflict. However, global oil inventories have been declining at an unprecedented rate, falling by an average of 2.8 mb/d over the past six months.

The rapid depletion of inventories is increasing pressure on governments and producers to restore disrupted supply routes. The IEA warned that any further disruptions will have major impacts on markets across the world.