New Delhi, May 13: The International Energy Agency (IEA) has stated in its monthly report that the ongoing conflict in Iran is affecting oil production significantly. In the Oil Market Report for May 2026, the agency highlighted that the ongoing struggle between the U.S.-Israel and Iran has severely disrupted oil production in the Middle East, leading to an inability to meet global oil supply demands this year.
The report indicates that more than ten weeks after the onset of war in the Middle East, various complications have arisen regarding oil supplies from the Strait of Hormuz, which is rapidly depleting global oil reserves. According to the IEA, conflicting signals regarding the potential for a resolution between the U.S. and Iran have resulted in significant volatility in global oil prices.
The IEA noted, “The movement of tankers through the Strait of Hormuz remains restricted. Total supply losses from Gulf producers have already exceeded 1 billion barrels, with over 1.4 million barrels of oil production halted daily. This is a substantial blow to supply.”
The report also points to erratic pricing trends. It mentions that the price of North Sea dated crude oil initially surged to $144 per barrel, then dropped below $100, before climbing back to around $110 per barrel. As of the report’s publication, no agreement had been reached between the two nations regarding the reopening of the Strait of Hormuz and ending the conflict.
Estimates suggest that by the third quarter of this year, tanker movements through the Strait of Hormuz may gradually return to normal.
The IEA has projected that the war will lead to a decline in global oil supply of approximately 3.9 million barrels per day (BPD) in 2026, an increase from the previous estimate of a 1.5 million BPD decrease. During March and April, a total reduction of 250 million barrels, or about 4 million barrels per day, was recorded in global oil reserves.
Additionally, the agency has now revised its oil demand forecast for this year, estimating a decrease of 420,000 barrels per day, up from an earlier prediction of an 80,000 BPD decline.
According to the IEA, the conflict has caused a sharp rise in oil prices, increasing the risk of reduced demand and slowing global economic growth. High oil prices, a weakening global economy, and fuel-saving measures are expected to exert further pressure on global oil consumption in the future.
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My name is Narendra Jijhontiya. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including TECHNOLOGY, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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