The global economy has suffered more than $50 billion in losses due to crude oil that has not been produced since the onset of the Iran war nearly 50 days ago. Analysts and calculations by Reuters indicate that the repercussions of this crisis will extend for months and potentially years.
Iranian Foreign Minister Abbas Araqchi reassured that the Strait of Hormuz remains accessible following a ceasefire agreement reached in Lebanon. U.S. President Donald Trump expressed optimism that a resolution to the Iran conflict might be achieved “soon,” though the exact timeline remains uncertain.
Since the conflict ignited at the end of February, over 500 million barrels of crude oil and condensate have been removed from the global market, per data from Kpler. This crisis marks the largest disruption in energy supply in modern history.
To contextualize the impact of this loss:
- It would result in the cessation of global aviation demand for 10 weeks;
- No road travel by any vehicle worldwide for 11 days; or
- A reduction in oil supply to the global economy for five days, according to Iain Mowat, principal analyst at Wood Mackenzie.
Additionally, this volume represents nearly a month’s worth of oil demand in the United States and over a month’s supply for Europe, as estimated by Reuters. Furthermore, it constitutes about six years of fuel consumption for the U.S. military, based on an annual usage of approximately 80 million barrels from fiscal year 2021, and could power the global international shipping industry for about four months.
Key statistics highlight the scale of the loss:
- Gulf Arab countries collectively experienced a decline of around 8 million barrels per day in crude production during March, roughly equivalent to the combined output of major oil companies Exxon Mobil and Chevron.
- Jet fuel exports from Saudi Arabia, Qatar, the United Arab Emirates, Kuwait, Bahrain, and Oman plunged from approximately 19.6 million barrels in February to just 4.1 million barrels for March and April combined, according to Kpler data. This reduction corresponds to sufficient fuel for about 20,000 round-trip flights between New York’s JFK airport and London Heathrow, as estimated by Reuters.
- With crude prices averaging around $100 per barrel since the beginning of the conflict, the total loss from these missing volumes translates to approximately $50 billion in revenue. This figure equates to a 1% reduction in Germany’s annual GDP or approximates the entire GDP of smaller nations like Latvia or Estonia.
FULL RESTORATION COULD TAKE YEARS
Despite Araqchi’s remarks about the openness of the Strait of Hormuz, the recovery of oil production and flows is expected to be gradual. Global onshore crude inventories have decreased by about 45 million barrels so far in April, according to Kpler. Since late March, production outages have totaled about 12 million barrels per day.
Restoration efforts for heavier crude fields in Kuwait and Iraq could extend four to five months, prolonging stock draws throughout the summer. Damage to refining infrastructure and Qatar’s Ras Laffan LNG complex indicates that full restoration of the region’s energy capabilities could take years.
