A deepening strain in global energy markets is approaching a critical juncture, as the disruption of oil flows through the Strait of Hormuz continues to reverberate across supply chains. According to an analysis originally published by The Financial Times, the loss of roughly 14.4 million barrels per day of crude production from Gulf countries in April has so far been partially cushioned by emergency measures. However, these stopgaps are rapidly losing effectiveness, raising the risk of a sharper global energy shock in the weeks ahead.
Until now, the impact of the crisis has been uneven. While parts of Africa and Asia have already experienced fuel shortages, much of the developed world has avoided severe disruption beyond higher petrol prices and increased airfares. This relative stability has been sustained through a combination of reduced consumption, emergency stock releases, and temporary supply adjustments. Notably, the International Energy Agency coordinated the release of a record 400 million barrels from strategic reserves, with flows of approximately 2.3 million barrels per day since mid-April, helping to stabilise markets.
Additional mitigating factors have included elevated oil shipments already in transit before the escalation, increased output from Gulf producers anticipating disruption, higher US crude exports, reduced Chinese imports, and refineries drawing down inventories rather than purchasing at elevated prices. Together, these measures have masked the underlying imbalance between supply and demand.
Despite these efforts, the global oil market remains structurally short. The International Energy Agency estimates that consumption is exceeding production by around 6 million barrels per day, accelerating the depletion of global inventories at an unprecedented rate. Temporary buffers are now eroding: floating storage outside the Strait of Hormuz has largely been delivered, while refinery stockpiles are diminishing.
The strategic reserve releases were predicated on the assumption that the Strait of Hormuz would reopen relatively quickly. That expectation is now fading. Governments, having already drawn down roughly one-third of their collective 1.2 billion-barrel reserves, are becoming increasingly cautious about further depletion. Meanwhile, although oil companies and traders hold over 3 billion barrels in commercial inventories, a significant portion is tied up in operational systems and cannot be readily released. JPMorgan has warned that OECD commercial inventories could approach critical operational thresholds as early as June.
Oil prices reflect both the strain and lingering uncertainty. Brent crude, trading near $109 per barrel, has retreated from peaks above $120 but remains more than 60 percent higher than pre-conflict levels. Markets had been supported by expectations of a diplomatic breakthrough between the United States and Iran that would allow shipping to resume through the strait. However, such a resolution appears increasingly unlikely in the near term. Even in the event of an agreement, restoring full shipping capacity and Gulf production could take months, potentially extending into the end of the year.
As supply tightens further, prices are expected to rise to curb demand, effectively forcing consumers to compete for dwindling resources. The most acute pressures are emerging not in crude itself but in refined products. Jet fuel and diesel markets are tightening significantly, particularly in Europe. Despite increased jet fuel production, reduced Middle Eastern supply has pushed European inventories below five-year averages. Diesel, critical for transportation, agriculture, and industry, is at risk of sharp price increases in Europe and outright shortages in parts of Africa.
Governments are beginning to respond. The International Energy Agency reports that nearly 80 countries have already implemented emergency measures. Developing economies face the greatest vulnerability, as fuel subsidies used to shield consumers from rising prices are becoming fiscally unsustainable. At the same time, advanced economies—particularly in Europe—may need to shift from cushioning demand through tax cuts toward more aggressive conservation strategies. Measures such as promoting remote work and expanding public transport usage are likely to become more widespread.
The broader conclusion is that the global energy system is entering a period of enforced adjustment. As the buffer of capacity and reserves diminishes, both policymakers and consumers will need to adapt to tighter energy constraints and structurally higher prices.
By Tamilla Hasanova
