The ongoing US-Iran war has resulted in the loss of about 2.8 billion barrels of crude oil exports through the Strait of Hormuz since the conflict began, according to the International Energy Agency (IEA).
However, the agency said alternative supply routes, stock withdrawals and weaker global demand have helped to cover a significant portion of the shortfall.
In its latest Oil Market Report (OMR), the Paris-based agency estimated that oil flows through the Strait of Hormuz averaged 7.6 million barrels per day (b/d) in August, about 13.1 million b/d below levels recorded before the war.
The IEA said routes that bypass the Strait have helped compensate for more than 500 million barrels of lost exports, equivalent to an average of 2.8 million b/d, since the conflict began.
Combined exports from Saudi Arabia’s Yanbu and the UAE’s Fujairah increased from 4.1 million b/d in February to 7.8 million b/d in June. However, Houthi attacks in the Red Sea later reduced the combined flows to 5.5 million b/d in August.
The agency also said increased production from countries outside the Middle East Gulf, including the United States, Brazil, Kazakhstan, Venezuela and Nigeria, had made up another 420 million barrels of the cumulative losses.
The remaining shortfall has largely been absorbed through stock withdrawals and reduced oil demand. According to the IEA, global observed oil stocks have been declining at record rates and are now 507 million barrels below levels recorded before the war began.
The agency estimated that global demand reductions since the beginning of the conflict have exceeded 1 billion barrels, with China and the Middle East accounting for a significant share of the decline.
It said apparent Chinese oil demand over the past six months was about 1.7 million b/d lower than February levels, reflecting declines in imports, refinery activity and deliveries of petroleum products.
The IEA said the lack of progress in negotiations between the United States and Iran had pushed back hopes of normalising oil flows through the Strait of Hormuz until next year.
The agency now expects shipping through the strategic waterway to remain restricted throughout 2026.
Fighting has intensified in recent days between the United States and Iran in the Middle East Gulf, while Saudi Arabia and Yemen’s Houthi rebels have also continued to clash in the Red Sea.
Global oil production fell by 1.6 million b/d in August from the previous month to 100.1 million b/d, the IEA said. About 10 million b/d of production from the Gulf region remained shut in during the period.
The agency expects global oil supply to decline by 5.7 million b/d year-on-year to 100.7 million b/d in 2026. The latest forecast is 1.3 million b/d lower than the projection in its previous report.
Production is, however, expected to rebound by 8 million b/d in 2027.
On the demand side, the IEA forecasts global oil consumption will decline by 2.5 million b/d to 102.5 million b/d in 2026. The projected reduction is about 940,000 b/d greater than the agency estimated in its previous report.
Global demand is expected to recover by 2.6 million b/d in 2027.
The IEA said the biggest demand losses would be concentrated in middle distillates and petrochemical feedstocks, particularly across Asia.
It added that disruptions to refined-product exports from the Middle East Gulf and Russia had severely reduced the availability of diesel and gasoil, pushing prices significantly higher.
Global refinery throughput reached a summer peak of 81.4 million b/d in August, representing an increase of 960,000 b/d from July. Despite the monthly rise, throughput remained 4.2 million b/d below levels recorded a year earlier.
“Refining margins reached record levels in the Atlantic Basin in August, led by sharply higher diesel cracks, while surging freight rates weighed on Singapore profitability,” the IEA said.
Source: International Energy Agency (IEA)
