Global oil market on the brink of collapse: production falls to historic low
13 March 06:16
The global oil market is experiencing historic turmoil due to the large-scale war in the Middle East. Due to the suspension of tanker traffic and attacks on infrastructure, oil production in the region has fallen by millions of barrels, triggering a jump in prices. This is stated in a report by the International Energy Agency (IEA), according to "Komersant Ukrainian".
The report notes that the war in the Middle East has led to an almost complete halt in shipping through the Strait of Hormuz, a key waterway for global fuel exports. Oil flows have fallen from 20 million barrels per day to a historic low.
Due to the inability to export raw materials and the overflowing of storage facilities, the Persian Gulf countries were forced to reduce production by at least 10 million barrels per day.
The most difficult situation is observed in Saudi Arabia, the UAE, Kuwait, Iraq, and Qatar.
In addition, due to constant attacks and the lack of sales markets in the region, oil refining capacities of over 3 million barrels per day have been halted ( ).
Market reaction and demand forecast
Brent oil prices rose sharply after the US and Israeli airstrikes on Iran on February 28, reaching over $120 per barrel. As of mid-March, the price has stabilized somewhat and stands at around $92.
IEA analysts have lowered their forecast for global oil demand growth in 2026 by 210 million barrels per day.
The main reasons were:
- massive cancellation of flights in the Middle East;
- interruptions in liquefied natural gas (LNG) supplies;
- instability in the global economy due to high energy prices.
IEA emergency measures
To stabilize the situation , on March 11 , IEA member countries made an unprecedented decision to release 400 million barrels of oil from their emergency reserves onto the market.
It is noted that global fuel reserves are currently at their highest level since 2021 (over 8.2 billion barrels), which provides a certain “buffer” to mitigate the effects of the conflict.
The situation on the oil market
It should be recalled that oil prices exceeded $100 per barrel immediately after the start of large-scale hostilities in the Middle East.
Due to the sharp jump in fuel prices, the administration of US President Donald Trump began preparing radical steps to stabilize the US domestic market.
At the same time, Republicans in Congress criticized the administration’s actions, pointing to the need for long-term solutions in the field of energy security.
In particular, the White House considered using the strategic reserve to release more than 100 million barrels onto the market.
It was also reported that the International Energy Agency proposed releasing the largest oil reserves in history from the reserve to counteract the sharp rise in oil prices caused by the US and Israel’s war against Iran.
