IEA Warns Global Oil Market Could Enter a ‘Red Zone’ by Summer

Strategic Oil Reserves Are Being Tapped

To prevent a sudden supply collapse, governments have coordinated large releases from strategic petroleum reserves.

IEA member countries are currently adding roughly 2.5–3 million barrels per day of oil from strategic reserves to the market in an attempt to offset disrupted exports.

These emergency stockpile releases are significant, but the agency has emphasized that such reserves “are not endless.” At the same time, companies and countries are also drawing down commercial inventories, accelerating the decline in global stockpiles.

How Much Global Oil Supply Has Been Lost

The disruption to Middle Eastern exports has already removed substantial volumes of oil from the market.

Several indicators illustrate the scale of the shock:

• The crisis could reduce global oil supply by about 3.9 million barrels per day through 2026, even after alternative routes and reserve releases offset some losses.
• U.S. energy data estimates that countries including Iraq, Saudi Arabia, Kuwait, the UAE, Qatar, and Bahrain shut in about 7.5 million barrels per day of crude production because restricted Hormuz shipping left storage capacity full.
• Saudi Aramco’s CEO has said the market already lost roughly 1 billion barrels of supply over about two months, and disruptions could remove around 100 million barrels per week if conditions persist.

Combined, these losses represent one of the largest oil supply disruptions in decades.

Brent Crude Price Expectations

With inventories shrinking and supply constrained, many analysts have shifted their outlook toward higher oil prices.

Several banks and analysts now expect Brent crude to trade around or above $100 per barrel if the Strait of Hormuz disruption continues.

Some forecasts suggest Brent could average above that level for extended periods if exports remain restricted, reflecting the large risk premium created by uncertainty around supply flows.

Why Oil Flows May Not Fully Recover Until 2027

Even if shipping through the Strait of Hormuz resumes soon, experts say the oil market will not return to normal immediately.

Energy executives warn that restarting the system involves multiple delays: restoring production that was shut in, repositioning tankers, clearing storage bottlenecks, and rebuilding supply chains disrupted by months of halted exports.

The head of the UAE’s state oil company ADNOC has warned that full oil flows through the strait may not return until the first or second quarter of 2027, even if the conflict ended immediately.

Similarly, Saudi Aramco’s leadership says the longer the disruption continues, the longer it will take the market to rebalance because global inventories have already been heavily depleted.

Why the Strait of Hormuz Matters So Much

The Strait of Hormuz is one of the most important energy transit routes in the world. A large share of global oil exports from the Persian Gulf normally passes through the narrow waterway, making any prolonged disruption capable of sending shockwaves through global energy markets.

With inventories falling, strategic reserves being tapped, and millions of barrels of supply disrupted, the coming summer months could become a critical test for the stability of the global oil market.