International Energy Agency: Global Oil Supply Drops by 10% in March

The International Energy Agency (IEA) released an analysis on April 14 stating that global oil supply fell by 10.1 million barrels per day in March, equivalent to 10% of the total. This is equivalent to three times Japan’s demand. The IEA noted that the de facto blockade of the Strait of Hormuz and attacks on energy facilities “created the most severe disruption in history.”

In 2022, the US and Europe imposed an oil embargo on Russia during its invasion of Ukraine. During the 1970s oil crisis, Arab oil-producing countries stopped supplying oil to countries they considered pro-Israel.

The IEA believes that the current US and Israeli attacks on Iran have had a greater impact on the energy market than these, and the geopolitical risks of using energy as a weapon have become apparent.

The IEA’s monthly report released on April 14 showed that global oil supply in March saw a larger decline than the previous forecast (a decrease of 8 million barrels per day) released in mid-March. This is because the US-Iran conflict, which began at the end of February, led to the blockade of the Strait of Hormuz and attacks on energy facilities.

The impact may be long-lasting. IEA Administrator Fatih Birol stated on the 13th that rebuilding the damaged Middle Eastern energy facilities “could take up to two years.” More than 80 facilities, including oil fields and refineries, were reportedly damaged, with over one-third severely damaged.

The IEA stated that “even if oil and gas supplies are restored by mid-year, they will not return to pre-war levels.” An additional 2.9 million barrels per day of supply is expected to be lost in April. Compared to February before the military conflict, supply will be reduced by 13 million barrels per day.

The total oil supply loss in March was 360 million barrels, and will reach 440 million barrels in April.

The production reduction is particularly severe in Gulf oil-producing countries such as Saudi Arabia and the United Arab Emirates (UAE). OPEC+, comprised of countries including OPEC and Russia, saw a decrease of 9.4 million barrels per day in oil production in March.

In early April, only 3.8 million barrels per day of oil passed through the Strait of Hormuz. Before the fighting began, 20 million barrels of crude oil, accounting for 20% of global consumption, passed through the Strait of Hormuz.

Saudi Arabia and the UAE transported the oil via pipelines bypassing the Strait, but the volume increased by only about 3.2 million barrels compared to before the attacks.

In response to the US’s “counter-blockade” of the Strait for ships entering and leaving Iranian ports, the IEA warned that “the world energy markets and economies need to prepare for serious disruption in the coming months.”

The IEA’s forecast for total oil supply in 2026 is 104.7 million barrels per day, a downward revision of 2.5 million barrels from its previous forecast. Under the “base case scenario” where the fighting subsides, supply will gradually recover in the second half of the year, but will still be 1.5 million barrels lower than the total for 2025.

Brent crude oil futures, the international benchmark, rose 63% ($46) in March, the largest increase since its listing in 1988. It is currently hovering around $100 per barrel.

Given the disruption in oil supply and rising prices, “demand destruction” is becoming a reality. The IEA stated that “the military conflict with Iran has completely upended our forecasts for global oil consumption.”

Except for a temporary decrease in 2020 due to the COVID-19 pandemic, global oil demand has been growing annually thanks to increased car ownership and economic growth in emerging market countries.

However, due to the US-Iran conflict, daily demand is projected to reach 104.25 million barrels in 2026, a decrease of 80,000 barrels from 2025. This marks the first decline since 2020.

The impact has begun to affect the real economy. Asia, reliant on Middle Eastern crude oil, has seen petrochemical plants forced to shut down. Prices of naphtha (crude gasoline), liquefied petroleum gas (LPG), and aviation fuel have surged, and supply has become unstable.

Oil is a raw material for a wide range of materials, including resins. In Japan, regarding building materials such as prefabricated bathrooms, in addition to TOTO halting orders, LIXIL and Panasonic subsidiaries have also changed delivery dates to indefinite.

Emerging market countries in Southeast Asia, with their less developed oil reserve systems, have been severely impacted, and gas stations are reducing sales.

Disruptions in the oil market will inevitably become a stumbling block to global economic growth. Given rising fuel prices and supply disruptions, the IEA has lowered its 2026 global economic growth forecast to 3% from the previous 3.4%.