Global Oil Supply Impacted by Ongoing Conflicts
More than 43% of the world’s oil supply now originates from countries embroiled in conflict, according to recent calculations by Reuters based on International Energy Agency (IEA) data. These nations produced approximately 45 million barrels of oil per day in 2025. The ongoing disruptions have surpassed previous energy crises, with no clear resolution in sight following the US and Israeli attacks on Iran, which have triggered the largest oil supply crisis on record.
The Russia-Ukraine war has further complicated the situation, affecting production and refining capabilities, while cuts in oil exports from Kazakhstan have added to the strain. Additionally, Libya’s persistent conflict and US restrictions on Venezuelan oil exports have intensified pressure on global oil supplies.
Gulf Disruption Puts Millions of Barrels at Risk
The current disruptions have increased global reliance on US oil supplies, although severe weather events have intermittently impacted these supplies. Analysts estimate that the Gulf oil disruption currently stands at around 5 million to 7 million barrels per day. In response, Saudi Arabia has been rerouting oil to the Red Sea, while Gulf exporters have been discreetly moving oil through the Strait of Hormuz. However, the risk to overall oil flows remains high, as evidenced by attacks in the Red Sea and near Egypt’s Suez Canal in July.
Wars Squeeze Refining Capacity Too
The ramifications of these conflicts extend beyond crude oil production. The ongoing wars in the Gulf and Ukraine have reduced global refining capacity by approximately 10%. Ukraine has targeted significant portions of Russia’s refining network, with attacks reaching facilities as far as Omsk, located around 2,700 kilometers from Ukrainian-held territory. As a result, Russia is now experiencing fuel shortages and has implemented bans on gasoline and diesel exports, further straining global fuel markets.
Rising fuel prices have emerged as a significant factor driving inflation, contributing to increased borrowing costs and pushing US debt to a record $40 trillion. Diesel prices in the US have also surged to unprecedented levels, even as refiners operate at maximum capacity. In response to the supply shock, the IEA has released record volumes from emergency stockpiles, although these releases are now largely complete, and global inventories continue to decline.
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