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War crisis, the world is consuming less oil

Politiko 2026-07-26 10:47:53

War crisis, the world is consuming less oil

The two main forces that keep the global oil market in balance are supply and demand. But now the war between Iran and the US has shaken both, and one of them could be damaged for a very long time.

On the supply side, the situation remains chaotic. The historic oil glut initially turned into the largest supply shock to the market. Then, in June, additional large quantities of oil entered the market.

Now, the escalation of conflict in the Middle East has limited the amount of oil coming from the Persian Gulf countries, returning uncertainty to international markets.

But even more difficult to understand is the situation on the demand side.

Over the course of five months of war, the global economy has adapted to supply shortages and learned to function on less oil. Last month, hundreds of millions of barrels that had been stuck in the Strait of Hormuz finally came onto the market, but faced a lack of interest from buyers.

Some of the Middle East's oil was sold only after its price fell sharply. The reasons why the world is buying less oil are many and complex. The solution is expected to be just as complicated.

In the three short weeks during which the Strait of Hormuz was partially reopened, something unexpected happened. More than 200 million barrels of oil, blocked in the Persian Gulf, quickly came onto the market, but buyers did not react.

Qatar Energy and the UAE state-owned company were forced to lower the price of oil by $6 to $9 per barrel to find buyers in Southeast Asia.

Currently, more than 18 million barrels of non-Iranian oil are still sitting in tankers outside the Persian Gulf, waiting for buyers. This is a level more than two and a half times higher than before the war began.

Iran has also faced much greater difficulties in selling its oil. After the memorandum of understanding with the United States, the country managed to export about 70 million barrels through the Strait of Hormuz. Although Washington granted temporary relief from sanctions, China remained practically the only buyer.

However, Beijing has also significantly reduced imports from Iran. According to data from the company Kpler, Chinese purchases fell from about 1.5 million barrels per day to just 630,000 barrels per day last month. Globally, oil demand continues to remain close to maximum capacity, especially since during the Iran war, it was 4 million barrels per day lower than before the war.

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