The war in the Middle East is creating the largest supply disruption in the history of the global oil market. With crude and oil product flows through the Strait of Hormuz plunging from around 20 mb/d before the war to a trickle currently, limited capacity available to bypass the crucial waterway, and storage filling up, Gulf countries have cut total oil production by at least 10 mb/d. In the absence of a rapid resumption of shipping flows, supply losses are set to increase.
Global oil supply is projected to plunge by 8 mb/d in March, with curtailments in the Middle East partly offset by higher output from non-OPEC producers, Kazakhstan and Russia following disruptions at the start of the year. While the extent of losses will depend on the duration of the conflict and disruptions to flows, we estimate global oil supply to rise by 1.1 mb/d in 2026 on average, with non-OPEC producers accounting for the entire increase.
The conflict is also having a significant impact on global product markets, with export flows through the Strait at a near standstill. Gulf producers exported 3.3 mb/d of refined products and 1.5 mb/d of LPG in 2025. More than 3 mb/d of refining capacity in the region has already shut due to attacks and a lack of viable export outlets. Runs elsewhere will be increasingly limited due to feedstock availability.
(Verse 1) Come gather ’round the ticker tape and see the latest news Of tankers in the Gulf of Oman shaking in their shoes The Strait is getting narrow and the prices getting high While the black smoke from a burning hull is staining up the sky And the IEA is warning of a dry and thirsty land As the oil leaks from the wreckage and it settles in the sand.
(Chorus) And it’s “Steady as she goes, boys,” but the escorts won’t be seen The U.S. Navy’s busy hunting drones and the machine While the diplomats are talking, the sailors pay the price And the world is held for ransom in a game of loaded dice.
(Verse 2) From the docks of dusty Dubai to the shores of old Iraq The container ships are burning with a target on their back The Houthis in the Red Sea say they’ll shut the southern gate While Fars News tells the story of a dark and looming fate And the people in the counting house are watching futures climb Past a hundred-dollar milestone for the second or third time.
(Verse 3) The Pentagon is silent on the tankers’ urgent plea “We cannot guard your cargo on a red and rising sea” “We’re focused on the missiles and the launchpads in the dunes” While the sirens in Bahrain are playing military tunes And the U.N. counts the millions who are fleeing from their home Displaced within the borders where the hungry spirits roam.
(Verse 4) So they open up the stockpiles, let the emergency flow To keep the wheels a-turning and the furnace fires aglow But an airstrike in the northland brings a rain of rockets down And the fire of the border war is spreading through the town Oh, the headlines are a-bleeding with the ink of modern war And I wonder if we’ve seen this tragic comedy before.
(Chorus) And it’s “Steady as she goes, boys,” but the escorts won’t be seen The U.S. Navy’s busy hunting drones and the machine While the diplomats are talking, the sailors pay the price And the world is held for ransom in a game of loaded dice.
The Strait of Hormuz is currently the center of a severe global crisis following its effective closure by Iran on March 2, 2026. As the world's most critical oil chokepoint, the strait facilitates the transit of approximately 20% of the global oil supply (roughly 20–21 million barrels per day) and 20% of liquefied natural gas (LNG).
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