The IEA is reacting to the effects of the conflict in the Middle East on the energy market. The Strait of Hormuz holds significant effects on the world economy and the energy security and affordability through the disruption of oil and gas flows through the Strait of Hormuz, and energy infrastructure in the region.

The conflict in the area which started on 28 February has disrupted the streams of energy trade across the Strait causing the biggest supply shock in the history of the global oil market. The situation has also decreased the supply of liquefied natural gas (LNG) in the world by approximately 20%.

On 11 March, the IEA Member countries had unanimously agreed to conduct the largest ever emergency release of their oil stocks as a measure to contain the market shocks.

Current market backdrop

The prices of oil and natural gas have upsurged owing to the war. By 11 March, Brent crude futures have increased more than 25 per cent since the hostilities began on 28 February, and Dutch TTF, the European natural gas market, has increased by nearly 60 per cent. Oil products markets have also been especially hit such as the diesel and the jet fuel markets. The effects are being experienced worldwide.

Flows of crude and oil products via the Strait of Hormuz have fallen to a mere trickle of approximately 20 million barrels per day (mb/d) prior to the war and currently. Traffic paralyzed, little ability to circumvent the waterway of the crucible, and storage is filling, the Gulf Countries have reduced the overall production of oil by no less than 10 mb/d, as we have reported in our latest Oil Market Report, released on 12 March. Unless shipping traffic is quickly restored, loss of supply will continue to expand.

The gulf region is one of the major exporters of the refined oil products to world markets, especially to the middle distillates, used as diesel and jet fuel. In 2025, the gulf producers sold 3.3 mb/d of refined oil products and 1.5 mb/d of liquefied petroleum gas (LPG). Already more than 3 mb/d of refining capacity in the region has been shut down as a result of attacks and non-existent viable outlets to export.

The middle distillates markets globally have not been very tight in comparison with other products. Consequently, the refineries outside the area seem to have limited scope to pump more diesel and jet fuel to offset such losses in case of losses in supply on a lasting basis.

Global Markets(Wikipedia)

The oil consuming nations have large reserves of oil to overcome short time losses in supply. The international recorded stocks of crude and products are at present estimated to dominate above 8.2 billion barrels, the maximum amount since February 2021. Approximately 50 of these are in the advanced economies with 1.25 billion barrels of these in government emergency stock with an additional 600million barrels of industry stocks obligated by the government. These stocks are the foundation of the emergency collective action which IEA has declared on 11 March to provide more oil supply into the market.

The war has also greatly affected the LNG production in the Gulf region. The global natural gas markets were slowly rebalancing after a massive shock occurred after the invasion of Russia in Ukraine in February 2022. It is projected that a new wave of LNG capacity will be introduced between now and the end of this decade and this will change the dynamics of the markets. But the tightness in gas markets in the first two months of 2026, and empty storage at the end of the heating season in the Northern Hemisphere is poised to drive up the demand on LNG in much of the next few months.

A prolonged outage of production in the Ras Laffan plant in Qatar may further create a serious issue in this market tightness. On 2 March, an attack on the facilities brought about production shutdown. Ras Laffan delivered 112 billion cubic metres (bcm) of LNG, also 300 000 barrels per day of liquefied petroleum gas (LPG), and 180 000 barrels per day of condensate, making it by far the largest LNG plant in the world.

What is so special about the Strait of Hormuz?

Strait of Hormuz is a slender sea passage, which is located between the Arabian Peninsula and Iran, and, which links the Persian Gulf to the Gulf of Oman and the Arabian Sea. It is an important trade route and is the main outlet of oil and natural gas that are manufactured in Saudi Arabia, UAE, Kuwait, Qatar, Iraq, Bahrain and Iran.

It was estimated that in 2025 around 25% of the world seaborne oil trade passed through the Strait, and there are few alternatives to oil flows avoiding the Strait of Hormuz. Crude pipelines only exist in Saudi Arabia and the UAE, which would potentially allow the rerouting to avoid the Strait with a capacity of 3.5 mb/d to 5.5 mb/d. Countries such as Iran, Iraq, Kuwait, Qatar and Bahrain are also dependent on the Strait to export the large percentage of their oil products.

In 2025, approximately 80 percent of the oil and oil products passing through the Strait was bound to Asia.

Besides that, more than 110 bcm of LNG went through the Strait of Hormuz in 2025. Approximately 93 percent of Qatar and 96 percent of the UAE LNG exports went across the Strait, which constitutes nearly a fifth of the entire LNG trade in the world. It does not have any other option of distributing these volumes to the market.

The majority of the LNG in the UAE and Qatar is shipped to Asia. In 2025, approximately 90 percent of the total amounts that get exported through the Strait of Hormuz was allocated to the Asian market. Just over 10% went to Europe.