Global Oil Supplies Plunge as Strait of Hormuz Blockade Persists

The International Energy Agency (IEA) has warned that the closure of the Strait of Hormuz is causing a historic deficit in global crude supply and rapidly depleting emergency oil inventories. Global oil stocks fell below 7.9 billion barrels for the first time since April 2025, with a cumulative drain of 410 million barrels between late February and July. The IEA reports that the global crude supply in July reached 101.5 million barrels per day, which remains 6.3 million barrels per day below the levels seen one year ago. This shortfall is driven largely by the fact that approximately 8.3 million barrels per day of production from the Gulf region remains paralyzed.

In response to the blockade, Gulf states are attempting to find alternative shipping routes. Saudi Arabia has successfully redirected substantial volumes of crude through its East-West Pipeline to the Red Sea port of Yanbu. Data from the IMF Portwatch platform shows Saudi cargo shipments from its Gulf coast fell from 47.5 million tons a year earlier to 6.3 million tons during April and May, while Red Sea exports rose from 29.6 million to 54.8 million tons. Conversely, the United Arab Emirates has struggled to bypass the strait. Despite having the Abu Dhabi Crude Oil Pipeline and ports in Fujairah and Khor Fakkan, these facilities remain vulnerable to drones and missiles. UAE Persian Gulf coast traffic fell to 12 million tons from 68.5 million tons in the same period of 2025, and traffic through alternative UAE ports also declined.

The supply crisis has led to extreme price volatility, with benchmarks fluctuating by nearly 40 dollars per barrel in July and peaking at 105 dollars on July 23. The shortage has also impacted refined products such as diesel, gasoline, and kerosene, pushing refining margins in the Atlantic Basin to record highs. While the US Navy claims to control the strait and has conducted mine sweeping, Iranian officials maintain the waterway will remain closed until the US complies with a June framework agreement and provides compensation for alleged violations.

Outlets with a center lean focus on the logistical struggle of Gulf states to find alternatives and the military claims of the US. Center left and center right sources emphasize the macroeconomic warnings from the IEA, specifically the depletion of strategic reserves and the resulting global supply deficit.