West Asia conflict: Gulf producers cut output by 10 million BPD as Hormuz traffic stalls, says report
New Delhi, March 12
The ongoing conflict in West Asia has triggered the largest supply disruption in the history of the global oil market, according to a report released on Thursday.
According to the report by the International Energy Agency (IEA), with limited capacity to reroute shipments and storage facilities filling up, oil-producing countries in the Gulf have cut production by at least 10 million barrels per day, it added.
"Unless tanker traffic through the strategic waterway resumes quickly, supply losses are likely to deepen further," it said.
Crude and petroleum product flows through the Strait of Hormuz have dropped sharply from around 20 million barrels per day before the conflict to minimal levels currently, severely affecting global supply chains, the agency said.
The IEA has estimated that global oil supply could decline by about 8 million barrels per day in March, although some of the losses may be partly offset by higher output from non-OPEC+ producers such as Kazakhstan and Russia.
Major supply reductions are being reported in Iraq, Qatar, Kuwait, the United Arab Emirates, and Saudi Arabia as storage tanks fill and exports stall.
The conflict has also disrupted refined fuel markets.
Export flows of petroleum products through the Strait have nearly stalled, while more than 3 million barrels per day of refining capacity in the Gulf region has already shut down due to attacks and limited export routes.
The disruption is also affecting demand. Widespread flight cancellations and interruptions to LPG supplies across the region could reduce global oil demand by around 1 million barrels per day during March and April, the agency said.
Earlier in the week, member countries of the International Energy Agency agreed to release 400 million barrels of oil from emergency reserves to stabilise markets.
The agency also noted that global oil inventories remain relatively strong at over 8.2 billion barrels, the highest level since early 2021, providing some buffer against supply disruptions.
— IANS
Reader Comments
Very worrying report. It's not just about petrol for cars. Think of the LPG for cooking and the aviation fuel. This will have a domino effect on the prices of everything. Hope the diplomatic channels are working overtime to help resolve the conflict. 🙏
Time to seriously double down on our renewable energy goals. We can't keep being at the mercy of geopolitics in the Gulf. Solar, wind, electric vehicles - this crisis should be the final push we need.
The report mentions higher output from Russia and Kazakhstan might offset some losses. India has been increasing imports from Russia. Perhaps this strategic shift will help soften the impact for us compared to other nations.
10 million barrels per day cut is massive! The Strait of Hormuz is a true chokepoint. This shows why India's investments in the Chabahar port and other alternative routes are so crucial for our energy security. Jai Hind!
While the focus is on oil, the article also says refined fuel markets are disrupted. This could hit industries and agriculture badly. I respectfully think the government's communication should be clearer on how they plan to manage this dual crisis of crude and refined products.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.