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With the blockade of the Strait of Hormuz, which normally carries around 20 million barrels of oil per day, the net drop in global supply is at 11 million barrels per day
A ‘no stock’ sign is displayed on a pump at a petrol station in Hyderabad on March 25, 2026. (Image: AFP)
The world has seen oil crises before, with the 1970s alone counting for a twin shock. In 1973, the Saudi kingdom and other Arab states cut supply to punish the US-led West for supporting Israel, triggering queues and recessions across Europe and America.
In 1979, Iran came into the picture as it is now. In the year of the Islamic Revolution when the Ayatollah-led new regime came in, the upheaval led to a cut in supply by nearly 5 million barrels a day.
That sent prices spiralling. For half a century, those two shocks defined what an energy crisis looked like. That benchmark has now been shattered, with Iran and Saudi Arabia again at the centre of it.
There has also been major political realignment since then on the issue of Israel, which attacked Iran in partnership with the Donald Trump-led United States starting February 28. But the political changes have taken years of wrangling and talking. It is the oil crisis that is more immediate.
WHAT DID IEA SAY?
The US-Israeli war on Iran was launched with strikes in Tehran that killed Supreme Leader Ayatollah Ali Khamenei.
Iran’s retaliation, besides peppering the Gulf countries with drones and missiles, has included closure of the Strait of Hormuz. That has choked off the single most important energy waterway on the planet.
“The war in the Middle East is creating a major energy crisis, including the largest supply disruption in the history of the global oil market,” said Fatih Birol, Executive Director, International Energy Agency (IEA), earlier this week. “In the absence of a swift resolution, the impacts on energy markets and economies are set to become more and more severe.”
HOW BAD IS IT? WHAT NUMBERS TELL US
The numbers are already staggering. The Strait of Hormuz normally carries around 20 million barrels of oil per day, which is approximately a fifth of global petroleum consumption.
With a blockade now on, IEA’s Birol puts the net drop in global oil supply at 11 million barrels per day, because there has been some compensation via other means. For instance, pipeline exports from Saudi Arabia and the UAE that bypass the Strait of Hormuz, and emergency release of strategic reserves.
But 11 million barrels per day (bpd) still exceeds the losses from the 1973 Arab embargo and the 1979 Iranian Revolution shock, combined. Those two together cost the world roughly 10 mn bpd. Hence, it is currently more than that.
Brent crude, which sat at USD 66 a barrel before the war, surged above USD 100 within the first week and briefly touched USD 120. It has since eased to around USD 100 following reports that peace negotiations may be held soon.
Iran’s strikes have also targeted the Ras Laffan complex in Qatar, the world’s largest liquefied natural gas processor. Qatari energy minister Saad al-Kaabi has said the attacks have knocked out around 17 percent of the country’s LNG export capacity, and that damage could take up to five years to fully repair.
Supplies of LNG have been cut by about 140 billion cubic metres (bcm), which is nearly double the 75 bcm shortfall that followed Russia’s invasion of Ukraine in 2022.
WHAT ARE THE EMERGENCY MEASURES TAKEN?
As part of mitigation, IEA member countries on March 11 agreed to release 400 million barrels from strategic reserves.
That was the largest such emergency draw in the agency’s history. The US had to waive sanctions on oil from Russia, and then even Iran, to ease supplies.
“These are not even stopgap measures,” as per Sheikh Nawaf Al-Sabah, CEO of Kuwait Petroleum Corporation.
His country, which was producing around 2.6 million barrels per day before the war, has been forced to cut production and halt deliveries to buyers, Reuters has reported. Shell CEO Wael Sawan was quoted saying at the annual CERAWeek energy conference in Houston this week: “The problem is, we are more in reaction mode… The best energy strategies are the strategies that actually look five, ten years out and build resilience from now.”
The US has vast oil production of its own, but may offer little immediate relief. ConocoPhillips CEO Ryan Lance said at the same conference that it would be difficult for producers to lift output meaningfully until 2027, as they are locked into spending plans set earlier this year. American LNG producers, already operating at full capacity, cannot make up the West Asia/Middle East shortfall either, he noted.
(With agency inputs)
March 25, 2026, 9:31 PM IST
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