Global oil inventories are declining at an unprecedented pace as ongoing disruptions in the Middle East continue to strain energy markets, according to the latest report from the International Energy Agency (IEA).
The agency warned that oil markets are likely to remain undersupplied until the final quarter of the year, increasing the possibility of renewed price volatility ahead of peak global fuel demand.
More than ten weeks after conflict intensified in the Middle East, disruptions around the Strait of Hormuz have significantly reduced crude exports from Gulf producers, tightening global supply chains and placing additional pressure on energy markets worldwide.
According to preliminary IEA estimates, global oil stockpiles fell by 129 million barrels in March and another 117 million barrels in April following military escalation involving Iran, the United States, and Israel.
The largest declines were recorded among OECD nations, where onshore oil inventories dropped by approximately 146 million barrels. Non-OECD economies also reported visible inventory reductions of around 24 million barrels during the same period.
The IEA described the situation as an “unprecedented supply shock,” estimating that cumulative crude supply disruptions from Gulf producers have now exceeded one billion barrels.
The agency stated that more than 14 million barrels of oil per day remain unable to pass through the Strait of Hormuz, one of the world’s most strategically important energy shipping routes.
In response to the crisis, the IEA previously announced the release of 400 million barrels from emergency reserves held by member countries. Around 164 million barrels have already been deployed into global markets to help stabilise supply conditions.
Oil prices have experienced sharp fluctuations as traders continue monitoring diplomatic efforts aimed at reopening the Strait and reducing regional tensions.
North Sea Dated crude, one of the key international oil benchmarks, surged to nearly $144 per barrel before falling below $100 and later recovering again amid continued market uncertainty.
Several major oil-producing nations have introduced emergency measures to minimise the impact of the disruption. Saudi Arabia and United Arab Emirates have rerouted portions of their exports through alternative terminals outside the Strait of Hormuz.
Meanwhile, producers in the Atlantic Basin, including the United States, have increased shipments to Asian markets in an attempt to ease supply shortages.
Russian oil exports have also risen after repeated attacks on domestic refineries reduced internal demand, while temporary sanctions waivers allowed additional Russian cargoes to enter global markets.
Despite supply challenges, the IEA noted that high energy prices and weaker global economic activity are beginning to reduce fuel consumption.
The agency now forecasts global oil demand to decline by approximately 420,000 barrels per day in 2026, lowering projected consumption to around 104 million barrels daily. This represents a significant downward revision compared with forecasts issued before the Iran conflict escalated.
According to the report, the petrochemical and aviation sectors have been among the hardest hit by higher fuel costs and slowing economic conditions.
The IEA believes oil demand could gradually recover later in the year if diplomatic negotiations lead to the reopening of the Strait of Hormuz and the restoration of regional exports during the third quarter.
However, the agency warned that supply recovery is expected to remain slower than demand growth, leaving global oil markets vulnerable to continued shortages and further price swings in the months ahead.
“With global oil inventories already drawing at a record pace, further price volatility appears likely ahead of the peak summer demand period,” the IEA said in its latest market outlook.
