Almost Half of Global Oil Now Originates from Conflict Zones After Six Months of Iran War
By Seher Dareen, Anushree Mukherjee and Robert Harvey
Global Oil Supply Disruptions and Their Economic Impact
Scale of the Current Oil Crisis
LONDON Aug 25 (Reuters) - Almost half the world's oil comes from countries affected by conflict in 2026, Reuters calculations show, underscoring that current disruptions have eclipsed previous energy crises.
Six months ago, U.S. and Israeli attacks on Iran triggered what has become the largest oil supply crisis on record, with no clear end in sight.
Compounding Conflicts and Supply Strains
Russia-Ukraine War and Its Ripple Effects
At the same time, the Russia-Ukraine war has forced production and refining cuts, including in nearby Kazakhstan this year.
Additional Strains: Libya and Venezuela
Ongoing conflict in Libya and U.S. restrictions on Venezuelan oil exports at the start of the year have added further strain.
Together, countries affected by those conflicts produced about 45 million barrels per day of oil based on 2025 output, accounting for more than 43% of global supply, according to Reuters calculations using International Energy Agency data.
Shifting Reliance and Ongoing Risks
Increased Dependence on U.S. Oil
The disruptions have increased the world's reliance on U.S. oil supplies, though that too has occasionally been disrupted by severe weather.
Not all of this year's supply disruptions happened at the same time.
Gulf Oil Disruptions and Secret Shipments
With Saudi Arabia re-routing oil to the Red Sea and Gulf exporters sneaking oil secretly out of the Strait of Hormuz, the current Gulf oil disruption stands at around 5 million to 7 million bpd, according to analysts' estimates.
Risks to Global Oil Flows
But risks to total flows remain high, as attacks in the Red Sea and near Egypt's Suez Canal in July demonstrated.
Impact on Refining Capacity and Fuel Markets
Global Refining Capacity Reductions
The conflicts in the Gulf and Ukraine have also cut global refining capacity by about a tenth.
Targeted Attacks on Russian Refineries
Ukraine has targeted much of Russia's refining network, striking plants as far away as Omsk, about 2,700 km (1,680 miles) from Ukrainian-held territory.
Russia is grappling with fuel shortages and has banned gasoline and diesel exports, tightening global fuel markets.
Economic Consequences and Policy Responses
Inflation and Debt Pressures
Higher fuel prices have become a key driver of inflation, contributing to higher borrowing costs and helping to push U.S. debt to a record $40 trillion.
Record U.S. Diesel Prices
U.S. diesel prices have climbed to record levels despite refiners running at peak capacity.
IEA Emergency Stockpile Releases
The IEA has released record volumes from emergency stockpiles to help cushion the supply shock. Those releases are now largely complete, even as global inventories continue to decline.
(Reporting by Robert Harvey and Seher Dareen in London, Anushree Mukherjee in Bengaluru: Editing by Mark Potter)
