THE Middle East war is creating the largest supply disruption in the history of the global oil market, as Iran’s choke hold on regional supplies forces Gulf producers to slash production, the International Energy Agency (IEA) said Thursday.
In its latest market report, the IEA said crude production was currently down by at least 8 million barrels per day (bpd), with an additional 2 million related to petroleum products including condensates shut off.
The conflict, which was triggered on Feb. 28 by American-Israeli attacks on Iran, is hampering the global economy’s supply of oil and weakening production capacity.
The war has seen Iran tighten its choke hold on the Strait of Hormuz, through which 20 percent of global crude passes, effectively all but shutting it down.
IEA said current flows through the strait were moving at less than 10 percent of pre-crisis levels, which in 2025 were around 15 million barrels per day — with “no signs of a de-escalation in hostilities, or a clear timeline for a recovery in flows through the strait.” It stressed that a resumption of flows would be key in minimizing the war’s impact on global markets.
Against that backdrop, major European stock markets were off more than half of 1 percent in early morning trading. In Asia, Japan’s Nikkei had shed 1 percent at the close while Hong Kong closed off 0.7 percent.
A threat from Tehran to bring down the global economy overshadowed an impending record release of strategic crude by the IEA. On Wednesday, it said its 32 members had agreed to unlock 400 million barrels of oil from reserves — their biggest release ever.
Stop-gap measure
“The coordinated emergency stock release provides a significant and welcome buffer, but in the absence of a swift resolution to the conflict, it remains a stop-gap measure,” the IEA warned.
The United States has proposed partially lifting sanctions against Russia in an attempt to offset the fallout from the squeeze on Hormuz, but Group of Seven nations on Wednesday rejected the idea.
Oil prices have gyrated since the crisis began, rising more than 30 percent to around $120 a barrel only to drop back.
Prices again topped $100 on Thursday but then fell again to around $92 a barrel, representing a day rise of some 6 percent as analysts predicted elevated prices for the foreseeable future amid reports of more Iranian attacks on vessels, notably off the coast of Iraq.
The IEA said in its report the shortfall could be partially addressed with alternative routes such as transit through the Bab-el-Mandeb Strait from the Red Sea, although this route has in recent years “carried a risk of Houthi [rebel] attacks.”
Despite efforts to stave off the disruption via emergency stockpiles, the IEA forecast March global oil supplies would drop 8 million bpd to 98.8 million bpd for their lowest level in four years.
“For forecasting purposes, we have assumed only minimal flows through the Strait of Hormuz in March,” it said.
Citing the “geopolitical alarm” in the region, Stephen Innes of SPI Asset Management said that “in brokerage jargon, the IEA’s decision [to release emergency supplies] is equivalent to using a garden hose to put out a refinery fire.” Kathleen Brooks, director of research at XTB, observed that “the conflict has intensified this week, and the longer the oil price remains elevated, the more damaging and long-lasting the inflation shock will be for the global economy.” The IEA concluded that even if the conflict intensity recedes to the extent oil flows can resume “it will take several days to weeks” for the backlog of tankers on both sides of the strait to clear.
“Additionally, shut-in upstream production will take weeks and, in some cases, months, to return to pre-crisis levels depending on the degree of field complexity and the timing for workers, equipment and resources to return to the region.
Asean special meeting
In the region, the foreign ministers of the Association of Southeast Asian Nations (Asean) will convene a special meeting to discuss the bloc’s response as the Middle East conflict approaches its second week.
Foreign Affairs spokesman for Asean 2026 Dax Imperial on Thursday said the ministers will hold the discussions via videoconference on March 13.
“It will cover Asean’s response to the situation in the Middle East. More details will be available tomorrow after the meeting,” he said in a text message to reporters.
After the meeting, a statement will be issued by the ministers, he added.
The conflict in the Middle East broke out on Feb. 28 following a joint military operation mounted by the US and Israel against Iran, targeting its nuclear facilities, which later killed Iranian Supreme Leader Khamenei.
Iran responded with deadly retaliatory strikes that have since expanded to target US bases in neighboring Gulf states like Qatar, Bahrain and the United Arab Emirates.
Department of Social Welfare and Development Assistant Secretary Irene Dumlao, in a previous press briefing on the sidelines of the 2026 Asean Socio-Cultural Community meetings, said the bloc is closely monitoring developments in the Middle East, which is host to more than a million Southeast Asian workers.
Dumlao said the Philippines stands ready to assist not only the Filipinos but also Southeast Asians “as may be necessary.”
