Global Oil Export Loss Reaches 2.8bn Barrels Since Start Of US-Iran War, Says IEA

The International Energy Agency (IEA) has estimated that about 2.8 billion barrels of oil exports had been lost through the Strait of Hormuz since the beginning of the US-Iran war in February this year.

IEA, however, reports that alternative supply, stock draws and lower demand had filled much of the gap.

Flows through the strait averaged 7.6 million barrels a day (b/d) in August, around 13.1mn b/d below pre-war levels, the Paris-based agency estimated in its latest Oil Market Report (OMR).

Exports through routes bypassing Hormuz have offset more than 500mn bl, or an average of 2.8mn b/d, of the losses since the conflict started.

Combined exports from Saudi Arabia’s Yanbu and the UAE’s Fujairah rose from 4.1mn b/d in February to 7.8mn b/d in June, before Houthi attacks in the Red Sea cut flows to 5.5mn b/d in August.

Increased production outside the Mideast Gulf from countries including the US, Brazil, Kazakhstan, Venezuela and Nigeria has offset a further 420mn bl of the cumulative losses, the IEA said.

The rest of the deficit appears to have been absorbed by stock draws and lower demand. The IEA said global observed stocks were drawing at record rates and stood 507mn bl lower than before the start of the war.

The Agency puts cumulative global demand reductions since the start of the conflict at more than 1bn bl, driven by steep falls in China and the Middle East. It said apparent Chinese demand over the past six months was running around 1.7mn b/d below February levels, reflecting lower imports, refinery activity and product deliveries.

The impasse in negotiations between the US and Iran has delayed the prospect of a normalisation of flows through the strait of Hormuz until next year, according to the IEA. The agency now assumes shipping through the strait will remain restricted throughout 2026.

Fighting has escalated between the US and Iran in the Mideast Gulf and between Saudi Arabia and Yemen’s Houthi rebels in the Red Sea in recent days.

Global oil production fell by 1.6mn b/d on the month to 100.1mn b/d in August, with around 10mn b/d of Gulf output still shut in, the IEA said.

Global supply is expected to fall by 5.7mn b/d on the year to 100.7mn b/d in 2026, with the supply forecast 1.3mn b/d lower than in last month’s report. Production is forecast to rebound by 8mn b/d in 2027.

It forecasts global oil demand will fall by 2.5mn b/d to 102.5mn b/d in 2026, a decline around 940,000 b/d steeper than projected in the previous report, before recovering by 2.6mn b/d in 2027.

Demand losses will be concentrated in middle distillates and petrochemical feedstocks, particularly in Asia. The IEA said disruptions to refined product exports from the Mideast Gulf and Russia had severely constrained diesel and gasoil availability and driven prices sharply higher.

Global refinery throughputs reached a summer peak of 81.4mn b/d in August, up by 960,000 b/d on the month but still 4.2mn b/d below year-earlier levels, the IEA said.

“Refining margins reached record levels in the Atlantic Basin in August, led by sharply higher diesel cracks, while surging freight rates weighed on Singapore profitability,” it said.

The OMR, one of the world’s most authoritative and timely sources of data, forecasts and analysis on the global oil market, noted that the continuing impasse in negotiations between the US and Iran had delayed the prospect of a normalisation of flows into next year.

According to the report, losses will be concentrated in middle distillates and petrochemical feedstock products, especially in Asia, but it projected demand to recover by 2.6 mb/d in 2027, narrowly offsetting this year’s losses.

It also warned that total oil supply was set to fall by 5.7 mb/d to 100.7 mb/d this year, with the expected recovery in the Gulf now deferred until 2027. However, it said that production is set to rebound by 8 mb/d in 2027. The Americas Quintet dominates growth in non-OPEC+ output, adding 1.4 mb/d in 2026 and 1 mb/d next year, it said.

On the refining sector, the report mentioned that refinery throughputs reached a summer peak of 81.4 mb/d in August, up 960 kb/d month-on-month, but 4.2 mb/d lower than a year ago, with losses spread across the Middle East, Russia and crude-importing economies in Asia. Global runs are forecast to decline by 2.6 mb/d to 81.5 mb/d in 2026, while refining margins reached record levels in the Atlantic Basin in August, led by sharply higher diesel cracks, while surging freight rates weighed on Singapore profitability.

The report also showed that global observed oil inventories plunged by a further 95 mb in August, taking cumulative draws since February to 507 mb, or 2.8 mb/d on average. Oil-on-water volumes declined by 65 mb as tanker traffic out of the Middle East came under renewed attacks. Non-OECD inventories drew by 52 mb, led by China, while OECD stocks rose by 23 mb as builds in commercial tanks more than offset a 19 mb draw in government stocks.

Benchmark North Sea Dated crude prices rose by $7.61/bbl to an average of $91.00/bbl in August, before surging to $113.48/bbl on September 9. Backwardation reached extreme levels as crude markets tightened in tandem with disruptions in the Middle East and Russia, while demand shifted towards Atlantic Basin barrels. Tanker costs also were up sharply, in line with rising demand.