Conflict-hit oil supply crisis deepens as nearly half of global output comes from affected countries

Nearly half of the world's oil supply is now coming from countries affected by conflict, highlighting the scale of disruption facing global energy markets in 2026 and eclipsing several previous oil crises.

Reuters calculations based on International Energy Agency data show that countries affected by conflicts involving Iran, Russia, Ukraine, Libya and Venezuela produced around 45 million barrels per day of oil in 2025. That represented more than 43% of global oil supply.

The situation has intensified following U.S. and Israeli attacks on Iran six months ago, which triggered what has become the largest oil supply crisis on record. The disruption has yet to show a clear path toward resolution.


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Middle East disruptions keep oil flows under pressure

The Russia-Ukraine war has also contributed to reductions in oil production and refining, including disruptions affecting nearby Kazakhstan this year. Conflict in Libya and U.S. restrictions on Venezuelan oil exports earlier in 2026 have added further pressure to global supplies.

Current disruptions in the Gulf have reduced oil flows by an estimated 5 million to 7 million barrels per day, according to analysts cited by Reuters. Saudi Arabia has redirected some crude shipments toward the Red Sea, while some Gulf producers have sought to move oil through the Strait of Hormuz despite the risks.

The threat to global energy flows remains elevated. Attacks in the Red Sea and near Egypt's Suez Canal in July highlighted the vulnerability of key shipping routes and raised concerns about further interruptions to international oil trade.

Refining capacity takes a major hit

The conflicts in the Gulf and Ukraine have also reduced global refining capacity by roughly 10%, adding pressure to fuel markets.

Ukraine has targeted Russia's refining infrastructure in a series of strikes, with attacks reaching facilities as far east as Omsk, around 2,700 km from Ukrainian-held territory.

Russia has responded to fuel shortages by restricting gasoline and diesel exports, further tightening supplies in international fuel markets.

The combination of crude supply disruptions and reduced refining capacity has contributed to higher fuel prices. Rising energy costs have also become an important source of inflationary pressure, complicating the outlook for interest rates and borrowing costs.

Greater reliance on U.S. oil

The disruptions have increased the world's dependence on U.S. oil supplies, although American production and distribution have also faced occasional interruptions from severe weather.

U.S. diesel prices have climbed to record levels even as refiners operate at high utilisation rates, underscoring the strain on refined-fuel markets.

The International Energy Agency has responded by releasing record volumes of oil from emergency stockpiles to help offset the supply shock. Most of those releases have now been completed, while global inventories continue to decline.

Reuters noted that the disruptions have not occurred simultaneously, meaning the headline figure for conflict-affected production does not represent the amount of oil currently lost from global markets. However, the concentration of such a large share of global production in conflict-affected regions underscores the heightened vulnerability of the world's energy system.

With major production centres, refining facilities and critical shipping routes all facing elevated risks, the global oil market remains exposed to further disruptions as conflicts in the Middle East and eastern Europe continue.

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