The global oil market is expected to remain under pressure until the final quarter of the year as disruptions in the Strait of Hormuz continue to limit supplies and drain inventories, the International Energy Agency said on Wednesday.
More than ten weeks after the outbreak of war in the Middle East, the Paris-based agency reported that global oil stockpiles are falling at one of the fastest rates on record due to severe interruptions in Gulf exports following US and Israeli strikes on Iran.
Preliminary data from the IEA showed that worldwide oil inventories declined by 129 million barrels in March and another 117 million barrels in April. The largest reductions were seen in developed economies, with OECD on-land stocks dropping by 146 million barrels. Visible inventories in non-OECD countries declined by 24 million barrels.
The agency said cumulative supply losses from Gulf producers have surpassed one billion barrels, while more than 14 million barrels per day remain unable to move through the Strait of Hormuz. The IEA described the situation as an unprecedented shock to global supply chains.
In response to the crisis, the agency announced in March that member nations would release 400 million barrels from emergency reserves to stabilize markets. Around 164 million barrels have already been released.
Oil prices have experienced sharp swings as markets react to uncertainty surrounding diplomatic efforts between Washington and Tehran aimed at reopening the key shipping route and reducing tensions in the region.
North Sea Dated crude, a benchmark for physical oil deliveries, surged to $144 per barrel at the height of the crisis before retreating below $100. Prices later rebounded as concerns over supply shortages persisted ahead of peak summer demand.
Major producers have attempted to ease market pressure by finding alternative export routes. Saudi Arabia and the United Arab Emirates redirected part of their shipments through terminals located outside the Strait of Hormuz. At the same time, Atlantic Basin producers, including the United States, increased exports to Asian buyers.
Russian crude exports also rose after repeated attacks on domestic refineries reduced local fuel demand. Temporary US sanctions waivers allowed additional Russian shipments to enter global markets.
Despite tighter supplies, the IEA said slowing economic activity and higher fuel prices are weakening consumption. Refiners have cut processing rates and reduced crude imports as industries and consumers scale back energy use.
The agency now forecasts global oil demand will decline by 420,000 barrels per day in 2026 to about 104 million barrels daily, a sharp downward revision from earlier expectations before the conflict with Iran escalated.
According to the IEA, the petrochemical and aviation sectors have suffered the most from rising prices and slowing economic growth. While demand may begin recovering later this year if a diplomatic agreement restores some flows through the Strait of Hormuz, supply is expected to recover at a slower pace.
“With global oil inventories already drawing at a record clip, further price volatility appears likely ahead of the peak summer demand period,” the agency said.
