Overview
The conflict involving the United States, Israel and Iran, together with an effective closure of the Strait of Hormuz, has produced an unprecedented level of daily oil supply loss. Calculations based on International Energy Agency (IEA) and U.S. Department of Energy (DOE) data indicate the current peak supply shortfall exceeds earlier peak losses recorded during major energy disruptions of the past half-century.
A broader, more complex shock
Unlike several past crises that primarily affected crude oil, the present shock has simultaneously curtailed production and shipments across multiple energy-related categories: crude oil, natural gas, refined transportation fuels and fertiliser feedstocks. The IEA has characterized the situation as the worst energy crisis the world has faced when its effects are viewed together with the lingering tail of the European gas crisis that followed Russia's invasion of Ukraine in 2022.
The multifaceted nature of the disruption reflects changes in the global energy system over recent decades: rising demand, deeper trade linkages and the emergence of the Middle East not only as a major crude supplier but also as an exporter of finished fuels. Large refinery complexes built in Gulf states supply jet fuel and diesel to regions including Africa, Europe and Asia, so interruptions to those facilities have translated into shortages of refined products as well as crude.
Scale by daily peak losses
The IEA reported a current peak supply loss of more than 12 million barrels per day (bpd), equal to roughly 11.5% of global oil demand in a year when demand is expected to average about 104.3 million bpd. By this daily metric, the present disruption is larger than the peak daily losses documented for several earlier major shocks:
- Arab oil embargo, 1973-74: peak daily loss of about 4.5 million bpd;
- Iranian Revolution, 1978-79: peak daily loss of about 5.6 million bpd;
- 1991 Gulf War: estimated peak daily loss of roughly 4.3 million bpd.
In addition to crude disruptions, the current conflict has affected natural gas markets. Roughly one fifth of global liquefied natural gas (LNG) production in Qatar has been shut down in the course of the crisis. The LNG market is materially larger now than it was during the earlier oil shocks; Qatar did not export LNG until 1996, a fact that underscores how the present disruption touches parts of the energy system that were either small or non-existent in the 1970s and 1990s.
Refined fuels and fertiliser impacts
The disruption extends beyond crude and gas into fuel markets and fertiliser supply chains. Gulf refineries that process crude into jet fuel, diesel and other finished products have seen production and export interruptions in the millions of barrels per day. These refiners are significant exporters, and their output normally services multiple regions. The stoppages have led to shortages of jet fuel and diesel in various markets.
Duration and cumulative losses compared
Daily peak losses tell one part of the story; the total cumulative removal of supply over time tells another. Using the same IEA and DOE data sets, an assessment of cumulative losses can be constructed by pairing reported peak or average daily shortfalls with the length of each disruption.
On that basis, and assuming the current loss has averaged 12 million bpd, the conflict had persisted for 52 days and removed an estimated 624 million barrels from the market over that period. That figure is a straight multiplication of the assumed daily loss by the duration and does not account for variations in loss intensity over time. Even with a rapid diplomatic resolution, officials and analysts expect supply disruptions to continue for months in oil markets and potentially for years in gas markets, which would push the eventual cumulative impact considerably higher than the present estimate.
By contrast, the 1978-79 Iranian Revolution, while smaller in peak daily scale than today's disruption, produced a larger cumulative loss over time. U.S. Department of Energy figures indicate Iran's crude production averaged about 3.9 million bpd lower from 1978 through 1981 - a cumulative deficit of approximately 4.27 billion barrels over those three years, based on that average. The DOE also notes that much of this production shortfall was offset by increased output from neighbouring Gulf producers, although such compensation was not complete.
Additional contemporary analysis notes that Iran's output fell sharply in 1979, with one estimate placing average production at about 3.1 million bpd that year versus roughly 6 million bpd in late 1978 - resulting in a cumulative loss of more than 1 billion barrels in 1979 alone.
Looking back further, the 1973-74 Arab oil embargo took several months for producers to implement full cuts, reaching the roughly 4.5 million bpd mark after about three months. The embargo, which ran from October 1973 to March 1974, produced an estimated cumulative loss in the range of 530 million to 650 million barrels.
The 1991 Gulf War disrupted oil output for approximately four months. Using an estimated peak loss of 4.3 million bpd applied across that period yields a cumulative shortfall in the vicinity of 516 million barrels, a total smaller than both the current short-term estimate and the larger cumulative losses from the Iranian Revolution.
Regional impacts and compensation limits
The early effects of the current crisis have manifested first in shortages to markets in Asia and Africa. By contrast, the United States was more directly affected by fuel shortages during the 1973 embargo, when motorists in some regions faced lengthy queues at gasoline stations and widespread supply disruptions for months.
During previous shocks, spare production capacity among Gulf producers helped mitigate shortages. In the present episode, however, countries that might otherwise provide additional crude have been constrained. Saudi Arabia and the United Arab Emirates, for example, have been limited in their ability to offset lost shipments because they too have been impacted by the stoppage of ships transiting the Strait of Hormuz.
Comparisons with the 2022 Russian-Ukraine energy disruption
The global energy disruption that followed Russia's invasion of Ukraine in 2022 also generated significant market dislocations as European countries moved to reduce dependence on Russian oil and gas. Russian oil output fell by about 9% in April 2022, a decline that the U.S. Energy Information Administration quantified as roughly 1 million bpd - substantially smaller than the current peak loss. Russian output later stabilised as export routes were adjusted, though continued operational risks remain in the region and have influenced production in subsequent years.
Concluding observations
The current U.S.-Israeli conflict with Iran combined with the closure of the Strait of Hormuz represents the largest single-day oil supply shock on record by daily output lost. When judged by cumulative losses, however, earlier events such as the Iranian Revolution and, to a similar extent, the 1973-74 Arab oil embargo produced equal or larger total removals from the market over extended periods. What sets the present disruption apart is its breadth - crude, gas, refined fuels and fertiliser supplies are all affected - and the context of a much larger, more interconnected global energy market than existed during prior crises. The IEA's release of 400 million barrels from strategic reserves is an unprecedented step aimed at stabilising markets, and analysts caution that while daily peak losses provide a snapshot of severity, the final economic and supply impact will be determined by how long disruptions persist and how quickly replacement flows can be mobilised.