The US-Israeli war on Iran and the closure of the Strait of Hormuz have caused the largest oil supply disruption on record in terms of daily output lost.
The International Energy Agency (IEA) said on Tuesday that the present crisis is the worst energy disruption the world has faced when combined with the tail end of the European gas crisis caused by the Russia-Ukraine war in 2022.
The scale of the disruption has revived comparisons with past energy shocks, from the 1973 Arab oil embargo to the 1979 Iranian Revolution and the 1991 Gulf War.
In 1973, Arab producers led by Saudi Arabia slapped an oil embargo on Western supporters of Israel in its war with Egypt.
How is the present crisis different?
Unlike earlier crises, the Iran war has simultaneously hit crude, natural gas, refined fuel and fertiliser supplies, exposing new vulnerabilities created by decades of rising demand, deeper global trade links and the Middle East’s expanded role as a supplier of finished fuels.
The peak supply loss from the current crisis stands at more than 12 million barrels per day, the IEA said earlier this month. That is equivalent to 11.5 percent of global oil demand, which this year is expected to average around 104.3 million bpd.
The outright daily supply loss is larger than earlier peak supply losses of 4.5 million bpd during the 1973 Arab oil embargo and of 5.6 million bpd during the Iranian revolution in 1979 combined, the IEA said. It is also higher than the estimated peak supply losses of 4.3 million bpd during the 1991 Gulf War, the IEA said.
The Iran war has also triggered the shutdown of roughly a fifth of the world's liquefied natural gas production in Qatar.
The world consumes much more gas than it did during the oil shocks of the 1970s and 1990s. During the Arab oil embargo and the Iranian Revolution, the LNG industry was nascent. Qatar first exported LNG in 1996.
The current disruption also extends beyond crude and gas into fuel markets.
How big is the disruption?
The US-Israeli war on Iran has disrupted millions of barrels per day of fuel production and exports from refineries in the Gulf, triggering shortages of jet fuel and diesel. Huge refineries built inside the Gulf in recent decades are key to global fuel supplies.
Based on that approach, the current conflict has lasted 52 days and removed an estimated 624 million barrels from the market, assuming a loss of 12 million barrels per day over that period, according to Reuters.
Even if a peace deal is reached quickly, supply disruptions are expected to persist for months and, in the case of gas, for years, pushing the final cumulative impact significantly higher.
The IEA says the 1979 Iranian Revolution resulted in a peak loss of 5.6 million bpd, smaller in scale than the current disruption. The revolution, however, led to a larger cumulative loss, according to Reuters.
According to the US Department of Energy, the revolution caused an average drop of 3.9 million bpd in Iran's crude oil production from 1978 to 1981, a loss of some 4.27 billion barrels over three years, although the US says much of this loss was compensated by Iran's Gulf neighbours.
