Over 43% of global oil now flows from conflict zones

Six months after U.S. and Israeli attacks on Iran triggered what the International Energy Agency has called the largest oil supply disruption in history, more than 43% of the world's oil production now comes from countries affected by armed conflict, according to Reuters calculations published on Tuesday.reuters

The analysis, based on IEA data, found that countries embroiled in the Iran war, the Russia-Ukraine conflict, Libya's ongoing instability, and U.S. restrictions on Venezuelan exports together produced roughly 45 million barrels per day in 2025 — underscoring the concentration of global energy supplies in zones of active fighting.marketscreener+1

Gulf Disruptions and Strained Shipping Routes

The largest single disruption stems from the war involving Iran, which has constrained flows through the Strait of Hormuz — a waterway that historically carried about a fifth of global traded oil. Analysts estimate current Gulf oil disruptions at between 5 million and 7 million barrels per day, even as Saudi Arabia has rerouted some exports through the Red Sea and other Gulf producers have sought alternative passages.firstpost+1

Attacks in the Red Sea and near Egypt's Suez Canal in July demonstrated how quickly risks can spread beyond the immediate conflict zone, threatening not just crude availability but the ability to transport it.economictimes+1

Refining Squeeze Compounds the Crisis

The wars in the Gulf and Ukraine have together reduced global refining capacity by roughly 10%, adding a second layer of pressure on fuel markets. Ukraine has struck Russian refineries as far east as Omsk — some 2,700 kilometers from Ukrainian-held territory — prompting Moscow to ban gasoline and diesel exports amid domestic fuel shortages.reuters+1

The IEA's August Oil Market Report projected global oil supply would decline by 4.3 million barrels per day in 2026, with growth from the Americas only partially offsetting losses in the Middle East and Russia.iea

Dwindling Safety Net

The IEA has released record volumes from emergency stockpiles to cushion the shock, but those releases are now largely exhausted even as global inventories continue to fall. Higher fuel prices have become a key driver of inflation, contributing to elevated borrowing costs and helping push U.S. government debt to a record $40 trillion.marketscreener+1

"The margin for another shock is becoming increasingly narrow," Reuters Thomson Reuters Corporation ↘ 4.69% reported, noting that the disruptions have eclipsed previous energy crises in their breadth and duration.reuters