The ongoing US-Israeli war on Iran, which erupted in early 2026 following heightened tensions and military strikes in the region, has rapidly destabilised the Middle East. The conflict has led to the closure of key oil shipping routes, most notably the Strait of Hormuz, a critical passage for global energy supplies. Within weeks, the blockade caused immediate disruptions to oil exports and sent shockwaves through international markets, raising concerns over regional stability and the world’s energy security.
As a direct consequence of the war, the world is losing up to 20-million barrels of oil per day from Middle East producers due to Iran’s effective closure of the Strait of Hormuz. This figure represents approximately 20% of the world’s daily oil production, underscoring the severity of the supply shortfall. The reduction in oil and gas availability has triggered a surge in costs for energy, fertilizers, and petrochemicals, rippling through economies and supply chains worldwide.
“These are not even stopgap measures,” Sheikh Nawaf Al-Sabah, CEO of Kuwait Petroleum Corp.
The impact has been swift and far-reaching. United Airlines announced it may have to raise ticket prices by up to 20%, while the Philippines declared a national energy emergency. Asia, the region most reliant on Middle Eastern supplies, is experiencing acute supply shocks, with experts warning that Europe will feel similar effects from April.
Asian nations are enacting measures to curb energy consumption, including implementing four-day work weeks and urging citizens to limit travel and use stairs instead of elevators. Meanwhile, governments globally are releasing a record 400-million barrels of oil from strategic reserves into the market. To put this in perspective, at the current global consumption rate of roughly 100 million barrels per day, this release would cover only four days of worldwide demand, highlighting the limited impact of such interventions.
In addition, the US has temporarily waived sanctions on certain Iranian and Russian oil, allowing refiners facing shortages to purchase supplies from these sources.
Despite these efforts, industry leaders remain sceptical. “These are not even stopgap measures,” said Sheikh Nawaf Al-Sabah, CEO of Kuwait Petroleum Corp. Kuwait, which previously produced about 2.6-million barrels per day, has had to reduce output and halt deliveries to buyers. While Saudi Arabia and the United Arab Emirates have managed to keep some exports flowing through pipelines bypassing the Strait of Hormuz, Al-Sabah emphasised that these routes and emergency measures fall far short of compensating for the supply disruption. “All told, the emergency measures were not even a drop in the proverbial barrel,” he added.
Takehiko Matsuo, Japan’s Vice Minister for International Affairs, agreed that coordinated releases from strategic reserves are insufficient to address supply shortages. Japan is contributing 80 million barrels to the International Energy Agency’s initiative and has around three weeks of gas in storage.
“None of this is going to be solved overnight,”. “This is a bad situation. You don’t think we would go faster if we could?” Schatzman remarked.
Looking ahead, German economy minister Katherina Reiche and Shell CEO Wael Sawan warned that supply shortages could hit Europe in April if the conflict persists. Sawan noted, “We are trying to work with governments to just alert them to the various levers they will need to pull, including on the demand side, including what they need to do around storage, what they need to do around purchasing.” He further highlighted that a lack of preparation has exacerbated the challenges, stating, “The problem is we are more in reaction mode. The best energy strategies are the strategies that actually look five, 10 years out and build resilience from now.”
In the United States, ConocoPhillips CEO Ryan Lance said it would be difficult for operators to increase output meaningfully until 2027, regardless of price changes, as producers are locked into spending plans set earlier in the year. The US, also the world’s largest producer of liquefied natural gas, cannot compensate for the Middle East shortfall because LNG producers are already operating at maximum capacity, according to Matt Schatzman, CEO of NextDecade. “None of this is going to be solved overnight,” Schatzman remarked. “This is a bad situation. You don’t think we would go faster if we could?”
The global energy crisis, triggered by the US-Israeli war on Iran and the closure of vital oil shipping routes, continues to present unprecedented challenges. Emergency government actions and industry interventions, though significant, have proven insufficient to fully address the supply gap. As the crisis evolves, experts stress the need for long-term strategies and greater resilience to safeguard global energy security in the years ahead.