Hormuz closure triggers historic oil shock as IEA releases record 400 mln barrels

2026-03-15 - 06:06

The closure of the Strait of Hormuz has triggered what the International Energy Agency (IEA) describes as the largest disruption to global oil markets in history, with worldwide supply expected to fall by around 8 million barrels per day in March, equivalent to nearly 8 percent of global output. In response to the severe supply shock, member states of the IEA agreed to release a record 400 million barrels from strategic petroleum reserves in an effort to stabilize markets and offset the sharp decline in production from the Middle East. The emergency measure comes as analysts warn that the disruption could deepen. A recent assessment by JPMorgan suggested that global oil supply cuts could approach 12 million barrels per day, heightening concerns about rising prices and economic slowdown, reports Al-Rai daily. The crisis has already pushed oil prices sharply higher, with Kuwaiti crude climbing above $143 per barrel, reflecting mounting fears about supply shortages in global energy markets. Historic Oil Supply Shocks Major disruptions to oil supplies have occurred periodically over the past five decades, reshaping global energy markets and often triggering economic crises. The 1973–1974 Arab Oil Embargo: The 1973 Arab Oil Embargo began during the 1973 Arab–Israeli War when Arab producers, acting through the Organization of Arab Petroleum Exporting Countries (OAPEC), cut production to pressure Western nations supporting Israel. The embargo led to a supply shortfall of about 4.5 million barrels per day, while crude prices surged from roughly $2.90 to $11.65 per barrel, nearly quadrupling within months. The crisis eventually led to the creation of the IEA in 1974 to coordinate responses to global energy emergencies. The 1978–1979 Iranian Revolution: Political upheaval during the Iranian Revolution toppled the government of Mohammad Reza Pahlavi and severely disrupted oil production. Iranian output dropped to around 4.8 million barrels per day, roughly 7 percent of global supply, causing prices to more than double within a year and contributing to high inflation and economic recession in the United States. The 1990–1991 Gulf Crisis: The Iraqi invasion of Kuwait removed approximately 4.3 million barrels per day from global markets after sanctions halted oil exports from both Iraq and Kuwait. Oil prices surged from about $17 per barrel to nearly $36 before stabilizing after the war ended. Hurricanes Katrina and Rita – 2005: The powerful storms that struck the U.S. Gulf Coast caused widespread damage to offshore energy infrastructure. Production disruptions peaked at 1.53 million barrels per day, prompting the U.S. Department of Energy and the IEA to release emergency reserves to stabilize supply. Russia’s Invasion of Ukraine – 2022: The Russian invasion of Ukraine triggered a global energy crisis as Europe rushed to reduce reliance on Russian oil and gas. Prices surged by more than 50 percent within weeks, prompting the administration of Joe Biden to release 180 million barrels from the US Strategic Petroleum Reserve. Middle East Conflict – 2026: The current regional conflict involving the United States, Israel and Iran has now created another major energy shock. Analysts estimate that global oil supplies have already declined by 12 to 16 percent, raising fears of a worldwide recession. The IEA’s unprecedented 400-million-barrel release aims to cushion the impact as markets struggle to absorb the disruption. Energy experts warn that the situation remains highly volatile, with global economic stability increasingly tied to developments in the Gulf and the reopening of the vital shipping lanes through the Strait of Hormuz.