The International Energy Agency (IEA) has released its monthly report indicating that oil production in the Middle East, particularly in the Gulf nations, has decreased by at least 10 million barrels per day following military clashes involving the US, Israel, and Iran. This reduction equals about 10% of the world’s oil demand. The report predicts a total drop of 8 million barrels in global oil supply by March, highlighting the severity of the situation.

The effective blockade of the Strait of Hormuz has disrupted the transportation of crude oil and petroleum products, leading to storage pressures in Gulf countries. The report points out that nations such as Saudi Arabia, the UAE, Iraq, Qatar, and Kuwait have begun scaling back their supply of crude oil. The ongoing conflict raises concerns regarding the speed of restoring transport operations, with the report suggesting that if transport is not promptly resumed, the decline in supply could further escalate.

In a coordinated effort, the IEA member states agreed on the 11th to release a total of 400 million barrels of oil from strategic reserves, which is seen as an important and welcome buffer against the mounting supply pressure. Nonetheless, the report emphasizes that this measure still remains a temporary fix, given the likelihood of a protracted conflict and the anticipation that a swift resolution remains unlikely.