One of the biggest casualties of this war has been the global energy supply, which has been hit hard.
Reiterating the crisis, which only brews more acuteness, the International Energy Agency (IEA) said it expects the total world oil supply to be 1.78 million bpd lower than demand in 2026 in the monthly report, against 0.41 million bpd higher in the previous report.
The agency also said that the global oil supply will fall by 3.9 million bpd in 2026, assuming Strait of Hormuz flows gradually resume from June, against the previous forecast of a 1.5 million bpd fall.
The Strait of Hormuz corridor is crucial, as nearly 20% of all oil transported passes through this narrow waterway. This, of course, was the case before the beginning of the US-Israeli war on Iran on February 28.
As per reports, owing to the conflict, the world oil demand has fallen by 420,000 bpd in 2026 on the Iran war (prev. forecast 80,000 bpd drop).
As per the IEA’s report for May 2026, the world oil demand is forecast to contract by 420 kb/d y-o-y in 2026, to 104 mb/d, 1.3 mb/d less than IEA’s pre-war forecast. The biggest decline is in 2Q26, down by 2.45 mb/d, of which the OECD accounts for 930 kb/d and the non-OECD for 1.5 mb/d.
In March and April, the world’s recorded oil stocks decreased by 129 million barrels (mb) and 117 mb, respectively. An even deeper depletion of 4.8 million barrels per day (mb/d) between March 1 and April 25 is suggested by another estimate from JP Morgan.
This hints at a fast rate of depletion.
Total global supply loss from the Hormuz closure is 12.8 million bpd since February.
The picture looks a lot different now, as passage has not only taken a major hit, but the status of the Strait and its character have changed, with Iran reiterating its intention to levy some form of toll for usage of the passage.
The price of Brent Crude currently stands at 106.95.
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