The International Energy Agency (IEA) has warned of an unprecedented energy shock, citing a major plunge in global oil production – over 10 million barrels per day in March – linked to conflict in the Middle East and failed diplomatic efforts. No new energy shipments have been loaded in April, indicating a worsening disruption.
Oil prices have yet to fully reflect the severity of the supply crisis, but the IEA anticipates they soon will. OPEC’s crude oil production significantly decreased in March as the near-closure of the Strait of Hormuz forced members to reduce output and find alternative export routes. Gulf Arab states have cut production due to export difficulties.
Global oil demand is now projected to decline this year, marking the first decrease since the 2020 pandemic, as rising prices stifle growth. The IEA’s forecast relies on a partial resumption of Middle East oil and gas deliveries by midyear, though not to previous levels.
The agency also reported instances of unnamed countries hoarding stocks, following what it described as the largest supply disruption in history, and a phenomenon it termed ‘demand destruction’.