Middle East War Erases 10 Million Barrels Daily from the Market and Increases Global Recession Risk
The war in the Middle East has severely impacted the oil market. Photo: Image generated with artificial intelligence.
TL;DR
- The conflict has removed about 10 million barrels of oil per day from the global market.
- This disruption poses a significant risk of global recession and could slow economic growth to 1.4% in 2026.
- The closure of the Strait of Hormuz is a key factor in the supply disruption.
- Market adjustments include higher prices, inventory use, and potential rationing.
- Demand reduction due to price increases is estimated at 2.4 million barrels per day, indicating low short-term price elasticity.
- Essential sectors have rigid demand, limiting price-driven supply-demand gap closure.
- The International Energy Agency has coordinated the release of 400 million barrels from strategic reserves, but these resources are limited.
- Inventories provide an insufficient buffer of 2-3 million barrels per day, and are primarily crude, not refined products.
- A shortfall of nearly 2 million barrels per day exists, potentially widening to 13 million barrels daily if the disruption prolongs.
- Widespread rationing is a risk if the deficit reaches 13 million barrels per day.
- Diesel is identified as the most sensitive point in the system due to its critical role in the real economy.
- The natural gas market shows a different dynamic, with less impact and potential for substitution.
- The main risk remains concentrated in the oil market, with the evolution of the Middle East conflict being decisive.