Nearly Half of Global Oil Supply Now Sourced From Conflict Zones, Analysis Shows

Nearly half of the world's oil supply now originates from countries embroiled in conflict, a Reuters analysis shows, highlighting an unprecedented level of disruption to global energy markets six months after the start of military action involving Iran.

A Multi-Front Supply Crisis

According to calculations by Reuters using International Energy Agency (IEA) data, countries affected by major conflicts produced approximately 45 million barrels per day (bpd) of oil based on 2025 output. This accounts for more than 43% of total global supply.

The disruptions stem from several concurrent geopolitical events:

• The conflict initiated by U.S. and Israeli attacks on Iran six months ago, described as the largest oil supply crisis on record.
• The ongoing Russia-Ukraine war, which has forced production and refining cuts in Russia and neighboring Kazakhstan.
• Persistent instability in Libya and U.S. sanctions on Venezuelan oil exports.

While not all supply disruptions have occurred simultaneously, analysts estimate the current shortfall from the Gulf region alone is between 5 million and 7 million bpd, with significant risks remaining to key shipping lanes like the Strait of Hormuz and the Red Sea.

Impact on Refining and Fuel Prices

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The combined conflicts in the Gulf and Ukraine have also slashed global refining capacity by approximately 10%. Ukrainian attacks on Russia's refining network have led to domestic fuel shortages and forced Moscow to ban gasoline and diesel exports, further tightening global fuel markets.

These supply constraints have been a key driver of inflation, contributing to higher borrowing costs and pushing U.S. national debt to a record $40 trillion. In the United States, diesel prices have climbed to all-time highs even as domestic refiners operate at maximum capacity.

Dwindling Buffers

To mitigate the supply shock, the IEA has released record volumes of crude oil from emergency stockpiles. However, these strategic releases are now largely complete, even as global inventories continue to decline.

The situation has increased the world's reliance on U.S. oil production, which is itself vulnerable to periodic disruptions from severe weather events. This leaves the global energy market with a diminished cushion to absorb future shocks.