IEA Warns of Growing European Oil Supply Disruptions as Middle East Conflict Escalates

The International Energy Agency (IEA) said on Wednesday it expects disruptions to global oil supplies linked to the Middle East to intensify in April, warning of meaningful consequences for Europe’s economy. The agency tied the expected deterioration to the closure of the Strait of Hormuz, which it said is sharply constraining oil movements.

Fatih Birol, the IEA’s Executive Director, said that since the start of the U.S.-Israel war on Iran, more than 12 million barrels of oil have been lost. He attributed the losses to attacks on energy infrastructure and constraints on shipping, describing the situation as a supply shock that is already affecting multiple parts of the global energy system.

Birol said the volume of oil lost in April is expected to be double the level seen in March, adding that liquefied natural gas (LNG) losses are also contributing to the disruption. He said the combined impact is likely to add to inflation pressures and weigh on economic growth in many countries, as higher energy costs feed through to transport, manufacturing, and household expenses.

The IEA said the effects may become clearer in April because many oil and LNG cargoes that arrived in March were booked before the conflict began. Birol said this timing means near-term deliveries may not fully capture the tightening conditions that could emerge as new shipments are arranged under changed security conditions and shipping constraints.

Beyond crude, Birol pointed to tightness in refined products, highlighting shortages of jet fuel and diesel. He said these shortages have already affected Asian countries and are expected to reach Europe by April or May, a development that could hit aviation, freight, and road transport and deepen the economic impact beyond crude markets.

Birol said the IEA is weighing additional releases from strategic reserves in response. He noted that IEA members previously agreed to release a record 400 million barrels, and said further action remains an option as the agency evaluates how large and how long the disruption could be.

He described the current oil and LNG disruption as more severe than the combined effects of the 1973 and 1979 oil crises and the loss of Russian gas volumes in 2022. The IEA did not provide a timeline for any decision on further reserve releases, and it said the scale of April’s disruption remains uncertain, depending on how long the Strait of Hormuz stays closed and how shipping restrictions develop.