IMF warns oil crisis ‘far from over’ as war enters seventh month

Six months after the U.S.-Iran war began in late February, global oil markets have settled into what analysts are calling a fragile "new normal" — functioning, but under persistent strain. The conflict has knocked out the bulk of Middle East oil flows, pushed Brent crude roughly 45% above pre-war levels, and forced governments, companies, and consumers worldwide to improvise an alternative energy architecture on the fly.

A Disruption Without Precedent

According to Energy Intelligence, global markets lost a total of 11.8 million barrels per day of crude oil and other supplies from the Middle East between March and August, amounting to roughly 58% of prewar flows and a cumulative loss of 2.17 billion barrels. The International Energy Agency's September report noted that Brent crude was trading around $105 per barrel at the time of writing, up 45% above pre-war levels.energyintel+1

Tanker traffic through the Strait of Hormuz has collapsed to less than 10% of pre-war levels from July through September, according to Hong Leong Investment Bank. A Reuters report on Sept. 13 described new attacks on Saudi Arabia and ships in the Gulf that further tested an already fragile supply picture, including a drone strike that temporarily shut Saudi Arabia's 7-million-barrel-per-day East-West pipeline.focusmalaysia+1

The global oil deficit widened sharply to 4.1 million barrels per day in August from just 0.1 million in July, and is expected to reach 4.8 million barrels per day in September.focusmalaysia

How the Market Has Coped

JPMorgan's ↘ 0.84% head of global commodities strategy, Natasha Kaneva, concluded in a special analysis that the oil market has weathered the shock far better than many expected. Saudi Arabia has used pipelines to divert millions of barrels to ports beyond Iran's reach. The United States, Venezuela, Brazil, Guyana, and Canada have together increased production by about 2 million barrels per day. Most countries outside the U.S. and China have drawn down strategic reserves less than anticipated.ynetnews

Global demand has also fallen sharply — by roughly 5 million barrels per day according to the CNN Warner Bros. Discovery, Inc. ↗ 0.03% analysis cited by Ynet, as consumers canceled travel plans, switched to electric vehicles, or reduced commuting. Energy Intelligence estimated the demand decline at about 2.8 million barrels per day, reflecting differing methodologies.energyintel+1

Risks Ahead

IMF Managing Director Kristalina Georgieva warned that the pressure is "far from over," noting that strategic reserve releases cannot continue indefinitely and that shipping through the Strait remains at roughly one-tenth of its pre-war level. She urged central banks to remain vigilant, saying policymakers must determine whether higher energy prices will trigger a wider inflationary cycle.thesun

"The market isn't returning to calm," said Jim Burkhard, head of global crude oil research at S&P Global ↘ 0.98%. "It is adjusting to the new normal defined by unresolved conflict and persistent maritime risk."ynetnews

Bob McNally, president of Rapidan Energy Group, offered a more pessimistic view. "A forever war — by jeopardizing the world's most important supply region — will accelerate the boom in oil and gas prices," he said. One unnamed major bank CEO told CNN the confrontation is "probably a forever war," adding: "After a certain point you realize it's just the new normal."ynetnews