IEA: largest oil supply disruption in history has removed at least 10 million barrels a day
Jillian Ambrose
The International Energy Agency has warned that the war in Iran has cut the region’s oil and gas production by at least 10m barrels of oil a day, as it warns that the conflict is creating “the largest supply disruption in the history of the global oil market”.
The escalating regional conflict has damaged key oil and gas infrastructure and many producers have begun shutting down production as exports via the strait of Hormuz have come to a halt and local storage facilities fill up.
In a new report, the world’s energy watchdog warned that the sharp slump in Middle East production could lead to a global slump in oil production of 8m barrels a day this year even with increased oil production from countries including Russia.
The fall in global oil supplies far exceeds the dent to global oil demand as a result of the war, according to the IEA. It has cut 1m barrels of oil a day from its global oil demand forecasts for this year due to lower refining and air travel in the Middle East.
It says:
With crude and oil product flows through the Strait of Hormuz plunging from around 20 mb/d before the war to a trickle currently, limited capacity available to bypass the crucial waterway, and storage filling up, Gulf countries have cut total oil production by at least 10 mb/d.
In the absence of a rapid resumption of shipping flows, supply losses are set to increase.
The impact of surging energy costs is also expected to weigh on global economic growth, which could cause demand to fall further, but the IEA said it was too soon to say how great the impact might be.
The global oil shortfall is expected to pile pressure on the market which is already reeling. The shut down of the strait of Hormuz, which carries a fifth of the world’s seaborne crude cargoes, has effectively wiped 15m barrels of oil a day to the global market leading to wild swings in market prices.
The Middle East war is creating the largest supply disruption in the history of oil markets
As a result, IEA Members have agreed to release 400 million barrels of emergency oil stocks to support market stability
More in our latest Oil Market Report ➡️ https://t.co/McMLAo4Ovn pic.twitter.com/FKwGwCd6G3
— International Energy Agency (@IEA) March 12, 2026
Key events
US crude oil is also moving higher, after Mojtaba Khamenei said the strait of Hormuz should remain closed.
West Texas Intermediate (WTI) oil is up 8.7% today at $94.92 a barrel, towards levels last seen on Monday (when crude smashed its way through the $100 mark).
If WTI rises over $100/barrel again, and stays there, it would increase the risks of a recession.
Jim Smigiel, chief investment officer at SEI, says:
“The situation in the Middle East remains fluid, with the closure of the Strait of Hormuz impacting a significant amount of global oil capacity and pushing WTI crude above the $100 threshold.
Historically, a price spike of this magnitude – above the highest level of the prior three years – is a well-known precursor to recessions and equity bear markets. While higher energy prices increase the risk of accelerating inflation, the dynamics are complex to model. Central bankers must now weigh these inflationary pressures against labor market risks, a balancing act that has defined the global economy across several supply shocks in recent years.”
Iran’s Supreme Leader Mojtaba Khamenei says strait of Hormuz should remain shut
Oil is nudging back towards the $100 mark, after Iranian Supreme Leader Mojtaba Khamenei said on Thursday the strait of Hormuz should remain closed as a tool of pressure.
In a message read out by a state TV broadcaster, the first the new supreme leader has issued since he was appointed to succeed his slain father, Mojtaba said all U.S. bases in the region should be closed as they would be attacked.
Brent crude is now trading above $99 a barrel, having hit $101.59 barrel early today before dipping back into double figures.
Wall Street opens lower
As predicted, Wall Street’s main indexes have opened lower.
The surge in the oil price back towards $100 a barrel today, after Iran escalated its attacks, is fanning inflation fears.
The Dow Jones industrial average has dropped by 519 points, or 1.1%, to 46,897 points in early trading.
Most stocks on the DJIA are down, led by construction equipment maker Caterpillar (-3.1%) and Goldman Sachs (-2.8%).
The broader S&P 500 share index index is down 0.95%.
Trump: Important to stop Iran getting nuclear weapons
Donald Trump has posted on Truth Social that the US will be making “a lot of money” from higher oil prices:
The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money. BUT, of far greater interest and importance to me, as President, is stoping an evil Empire, Iran, from having Nuclear Weapons, and destroying the Middle East and, indeed, the World. I won’t ever let that happen! Thank you for your attention to this matter. President DONALD J. TRUMP
Fact check: Leaving aside the president’s spelling of ‘stopping’ (I’m not one to cast aspersions!), the profits of higher oil prices won’t be shared evenly.
A recent paper showed that after the 2022 oil price surge in the US, 50% of the windfall benefit from higher prices in the sector went to the wealthiest 1% of individuals, via the stock market. The bottom 50% of people received only 1%.
That’s from my colleague Heather Stewart’s column on Sunday:
The Iran war is driving up air fares between Asia-Pacific regions and Europe.
Bloomberg report:
A cascade of more than 46,000 flight cancellations has been triggered across the region since the conflict began on Feb. 28, according to data from Cirium Ltd. The crisis wiped out as much as 10% of global airline capacity earlier this month, in the biggest aviation shock since the Covid-19 pandemic.
The sudden capacity drop from Gulf airport closures has sent airfares soaring on some key routes. One economy class round-trip ticket from Sydney to London from April 3-10 has increased by more than 80% over the past two weeks, while a business class ticket for the same route was running about 40% higher, according to a Bloomberg analysis of Google Flights data as of March 12.
Iran war jitters are set to weigh on the US stock market, when trading begins in 15 minutes.
The Dow Jones industrial average is set to fall 349 points, or 0.8%, according to the futures market to 47,099 points.
No jump in US worker layoffs
The Iran conflict has not caused a spike in US layoffs, new data suggests.
The number of Americans filing new claims for unemployment support last week dropped by 1,000, to 213,000, down from 214,000 in the previous seven days.
This ‘initial claims’ data is a proxy for whether firms are holding onto staff, or cutting headcount.
Lisa O’Carroll
Trade news: EU countries could be trading under the controversial Mercosur deal as soon as May with a key legal step towards implementation just taken in Brussels.
The “college” of European commissioners agreed today to send the “note verbale” to Paraguay which has already ratified the deal – with a group of Latin American countries – locally along with Argentina.
Under the rules, the deal will become available for traders on the first day of the second month after the note, a type of official diplomatic cable, has been sent.
It means if sent this week Mercosur could be applicable on 1 May.
The deal has yet to be ratified by the European parliament which is challenging it in the European Court of Justice.
However the European Commission’s has the power to implement it temporarily given it has already been approved by a majority of member states.
Commission president Ursula von der Leyen’s gamble has set her on a collision course with opponents including farmers and France, but her gamble will be trade will be booming by the time the ECJ rule thus making it difficult for the parliament to not ratify the deal.
U.S. Energy Secretary Chris Wright has also said today that global oil prices are unlikely to hit $200 a barrel.
Asked by CNN if oil might hit the $200 mark, due to the lack of traffic through the strait of Hormuz, Wright replied:
“I would say unlikely, but we are focused on the military operation and solving a problem.”
Denmark’s energy minister has called on citizens to reduce their energy use amid the ongoing Middle East conflict, CNBC reports.
Lars Aagaard, Denmark’s minister for climate, energy, and utilities, told local broadcaster DR:
“What the Danes should please, please, please do is that if there is any energy consumption that you can do without, if it is not strictly necessary to drive the car, then don’t do it.”
US cannot escort ships through Strait of Hormuz now, maybe by month’s end, US energy chief says
This won’t reassure the oil market much!
US energy secretary Chris Wright has told CNBC on Thursday that the Navy cannot escort ships through the Strait of Hormuz now but it was “quite likely” that could happen by the end of the month, Reuters reports.
NEW: Energy Secretary Chris Wright tells CNBC that U.S. navy vessels will be escorting oil tankers through the Strait of Hormuz ‘relatively soon.’
Says it likely will happen this month.
Adds that U.S. Navy vessels are currently focused on offensive action against Iran pic.twitter.com/PQ8h7n0VL0
— Jon Michael Raasch (@JMRaasch) March 12, 2026
Lloyds banking error shows customers other users’ transactions
Zoe Wood
Some customers of Lloyds, Halifax and Bank of Scotland were able to see the bank accounts of other customers when they logged into their app this morning.
Customers reported difficulties logging into their bank accounts and in some cases were able to view account details and transactions that did not belong to them.
One woman told the BBC she was able to see the accounts of six different users on the Bank of Scotland app, including some national insurance numbers, over a 20-minute period.
She could see benefits payments from the Department of Work and Pensions, which use the national insurance numbers of recipients as a payment reference. She also saw references to Waitrose transactions, despite not living near a store.
While a Lloyds Banking Group spokesperson apologised and said the incident had been quickly resolved, customers were still reporting difficulties logging into their bank accounts this morning.
Google names new HQ after Go move
Away from the energy crisis, Google has named its new European headquarters in London after a famous move in the game of Go.
After several delays and setbacks, Google has announced that it will finally start moving into the new building, at London’s King’s Cross (just across from Guardian Towers) this summer.
And it’s named it “Platform 37”.
This is a reference to a dastardly clever move played by the AI system AlphaGo in a game of Go against Go world champion Lee Sae Dol.
Google Deepmind’s Demis Hassabis explains in a blog post:
Go is incredibly complex, with more possible board configurations than the number of atoms in the known universe, and has long been a proving ground for AI research. “Move 37” was so unconventional that human experts initially thought it was a mistake. But as the game unfolded, it became clear it enabled AlphaGo to win the game.
AlphaGo’s victory heralded the beginning of what is now recognized as the modern era in AI, and catalyzed our work using AI to tackle scientific problems. Since that breakthrough, our AI systems have helped accelerate advances in fields like materials discovery, fusion energy research, mathematical reasoning and biology.
IFS: UK government should start prepping now in case energy bill support needed
The UK government should start preparing in case it needs to support households cope with surging energy prices, the Institute of Fiscal Studies says.
In a new report, the IFS point out that the shock to gas prices remains significantly smaller than during the 2022–23 energy crisis – when the Liz Truss administration capped energy bills.
But this time, the IFS says, the government finds itself in a less favourable starting position.
Bobbie Upton, research economist at the IFS, explains:
If prices keep rising, the government will face some difficult choices about whether – and how – to respond.
Support for households and businesses would help insure them against temporarily higher prices, but a repeat of the blanket support of 2022 would blunt incentives to reduce energy use when supplies are scarce. It would also put real strain on the already-fragile public finances.
Targeted support, backed by investments in better data, could deliver help to those who need it most at significantly lower cost to the taxpayer. With some time left before the next winter, now is the time to start preparing.”