"Largest Oil Supply Disruption in History," IEA Sharply Lowers Supply Growth Expectations! These Commodities Surge

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Source: Futures Daily

Yesterday, the International Energy Agency (IEA) released its monthly report, showing that conflicts in the Middle East have caused the largest-ever disruption in oil supply, affecting 7.5% of global oil supplies. The agency significantly downgraded its global oil demand and supply forecasts as a result.

The IEA stated that this month, global daily oil supply decreased by 8 million barrels, with transit flow through the Strait of Hormuz dropping over 90%. Demand was also impacted, with rising oil prices, flight cancellations, and economic uncertainties dragging down growth. The IEA lowered its 2026 global oil demand growth forecast from 850,000 barrels per day to 640,000 barrels per day, a decrease of about 25%. On the supply side, the forecast for 2026 global oil supply growth was cut from 2.4 million barrels per day to 1.1 million barrels per day.

On March 12, the domestic energy and chemical sector surged, with many varieties rising over 10%.

Jinlianchuang crude oil analyst Han Zheng told Futures Daily that the sharp rise in crude oil, fuel oil, and low-sulfur fuel oil futures prices is mainly due to ongoing concerns about geopolitical tensions and energy supply.

“Although on March 11, IEA member countries agreed to release 400 million barrels of strategic petroleum reserves, the Strait of Hormuz remains blocked. Incidents such as attacks on Thai ships and the shutdown of Iraqi oil ports have continued to boost market optimism. As a result, crude oil and fuel oil futures prices have surged,” said Huangfu Yong, a researcher at Zheshang Futures.

According to Du Bingqin, Director of Energy and Chemical Research at Everbright Futures, some upstream oil fields in the Middle East have already begun reducing production, and refinery operating loads in Asia have generally decreased by 10% to 20%. Domestically, some large refining companies have already cut production. As of March 11, the operating rate of China’s local refineries using continuous catalytic reforming was 68.63%, down 0.52 percentage points from the previous week.

Huangfu Yong added that although domestic refinery raw material inventories are ample, they will gradually deplete, and from April onward, substantial reductions in production are expected.

In Huangfu Yong’s view, the 400 million barrels of strategic crude oil reserves released by the IEA can somewhat ease the raw material pressure on refineries in Japan, South Korea, and some South Asian countries. However, since this release only covers about 50 days of global oil demand and the total strategic reserves of IEA members amount to 932 million barrels, with 532 million barrels remaining after the release, its capacity to further suppress oil prices is limited.

Additionally, Du Bingqin believes that the speed of strategic petroleum reserve (SPR) releases is also worth monitoring.

“The U.S. Department of Energy has announced plans to release 172 million barrels of SPR within 120 days, adding about 1.4 million barrels per day of crude supply. The release speeds of other countries’ SPRs remain uncertain. If the Middle East conflict spreads and threatens ports outside the Strait of Hormuz, some supplies could be permanently lost,” Du said.

Given the domestic refineries’ higher sensitivity to Middle Eastern crude oil shortages, Du believes that in the near future, domestic crude oil futures will outperform WTI and Brent crude futures. Specifically, until the Strait of Hormuz reopens, global oil supply disruptions will be difficult to resolve effectively, and domestic oil futures are likely to maintain a certain premium over foreign markets. Geopolitical developments will amplify market volatility, so traders should implement risk controls.

Regarding the fuel oil market, Huangfu Yong noted that the second and third quarters are typically peak demand seasons. However, attacks on Russian refineries have damaged capacity, making export growth difficult. With limited exports from key supply regions in the Middle East and Russia, coupled with a global natural gas shortage, the tight supply situation for fuel oil is unlikely to change.

Nanhua Futures energy and chemical analyst Ling Chuanhui believes that overall, under ongoing conflicts involving the U.S., Israel, and Iran, and high freight costs, the short-term supply-demand imbalance in fuel oil and low-sulfur fuel oil markets will persist. Hedging users are advised to avoid price, basis, and delivery risks; ordinary traders should avoid chasing prices and focus on position management.