The International Energy Agency (IEA) has warned that the ongoing war in Iran would create the largest supply disruption in the history of the global oil market, with global oil supply expected to fall by eight million barrels per day this month or almost 250 million barrels in total.

The agency said this in its monthly report released yesterday, noting that flows through the Strait of Hormuz, a key route for oil shipments, have dropped by more than 90 per cent.

It added that last year, about 20 million barrels of crude and petroleum products passed through the strait.

“The war in the Middle East is creating the largest supply disruption in the history of the global oil market,” the agency stated

The resulting supply shortage has pushed Brent crude above $100 a barrel following attacks on two crude tankers in Iraqi waters and the evacuation of Oman’s key oil export terminal.

The conflict has also impacted global demand, the IEA said, with flight cancellations and economic uncertainty prompting it to reduce its forecast for global oil consumption growth in 2026 by roughly 25 per cent to 640,000 barrels per day, the lowest since it began issuing forecasts last April.

To stabilise markets, IEA member countries agreed to release 400 million barrels from emergency reserves, while the United States will deploy 172 million barrels from its Strategic Petroleum Reserve.

IEA Executive Director, Fatih Birol, said the coordinated release is aimed at countering the disruption, though the pace and duration of deliveries were not specified.

The Strait’s closure has forced Gulf producers to cut roughly 10 million barrels per day of output, the agency said. While Saudi Arabia and the United Arab Emirates can divert some barrels through alternative routes, the effective closure of Hormuz has significantly reduced global supply.

The supply disruption has also reduced the IEA’s projection for a global oil surplus in 2026 by more than a third, to around 2.4 million barrels per day.

Output losses in the Middle East are partially offset by higher production from countries outside OPEC+ and increases by OPEC+ members Kazakhstan and Russia, the agency said.

The IEA highlighted that the Strait closure threatens about 4 million barrels per day of regional refining capacity, particularly affecting diesel and jet fuel availability.

Constraints on feedstock availability in other regions could further limit the global supply response.

The U.S. Energy Secretary, Chris Wright, said the full deployment of the 172 million barrels from the Strategic Petroleum Reserve will take about 120 days, emphasising the scale of the disruption.

The agency said the effects of the war on global oil markets will be felt well beyond the period of disruption, particularly in crude flows, refining, and exports.