The ongoing war in Iran has caused the largest oil supply shock in history, resulting in daily production losses that are unprecedented. However, the oil crisis linked to the 1979 Iranian Revolution remains the largest when considering total cumulative supply loss. This situation has drawn comparisons to past oil crises, such as the 1973 Arab oil embargo, the Iranian Revolution, and the 1991 Gulf War, revealing changes in global energy markets.
The current conflict has disrupted multiple energy sources at once, including crude oil, natural gas, refined fuels, and fertilizer supplies. This situation highlights the vulnerabilities in the energy market due to rising demand and global trade. In response to this crisis, the International Energy Agency (IEA) has released a record amount of oil from strategic reserves, totaling 400 million barrels, to stabilize market conditions.
Peak supply losses during this conflict have exceeded 14 million barrels per day, which represents about 13.6% of the projected global oil demand this year. This situation significantly surpasses the peak losses during previous crises, such as 4.5 million bpd in the 1973-74 oil embargo and 5.6 million bpd during the Iranian Revolution. Additionally, about one-fifth of global liquefied natural gas production from Qatar has been impacted due to the conflict.
The IEA reported that cumulative supply losses from Gulf producers have already surpassed 1 billion barrels. When projecting future losses during the contested period, it is estimated that the conflict could ultimately lead to around 1.5 billion barrels of oil removed from the market. Despite a temporary deal, ongoing disruptions are anticipated for several months, particularly affecting gas supplies for years.
Comparatively, the Iranian Revolution caused smaller daily losses but a more considerable cumulative impact, with estimates indicating around 4.3 billion barrels lost over three years. In contrast, past oil crises like the Arab oil embargo and the Gulf War led to less cumulative loss compared to the current situation faced in the Iran conflict.
With information from Reuters
