Global oil production plummeted by 10.1 million barrels per day (mb/d) in March, marking the largest single-month decline in history, according to the International Energy Agency (IEA).
The agency warned that the energy market faces an even harsher landscape in April as the blockade of the Strait of Hormuz restricts the flow of crude, natural gas, and refined products.
According to the IEA’s monthly market report, the conflict—which began on February 28 following US and Israeli strikes on Iran—resulted in an accumulated loss of over 360 million barrels in March. The agency expects that figure to climb to 440 million barrels in April.
At the start of April, the near-total blockade of the Strait of Hormuz by Iran reduced the volume of oil and gas moving through the vital waterway to just 3.8 mb/d, down from more than 20 mb/d in February.
While exporters like Saudi Arabia, the United Arab Emirates, and Iraq have activated alternative routes, total export losses now exceed 13 mb/d. This deficit is currently being covered by depleting global reserves.
Demand projections slashed
The IEA has significantly lowered its global demand forecasts for the year, now estimating an average of 104.259 mb/d. This represents a reduction of 730,000 barrels per day compared to the agency's March projections.
Between the second and fourth quarters, the agency anticipates a consumption drop of 1.5 mb/d, the sharpest decline since the 2020 COVID-19 pandemic. If supply disruptions persist, the agency warns that year-on-year demand could collapse by as much as 5 mb/d.
IEA Executive Director Fatih Birol stated in Washington that "April should be worse than March" for the energy sector. He noted that while the market was sustained last month by tankers loaded before the hostilities, that buffer has now vanished.
"It is the most important energy crisis in history," Birol said, noting the impact extends beyond oil and gas to essential commodities like fertilizers, petrochemicals, and helium.
Physical oil prices have reached record highs near $150 per barrel, with some distillates in Singapore exceeding $290. These prices are increasingly disconnected from futures market benchmarks like Brent crude.