Global oil supply to plunge by 8mb/d

March 18, 2026 (MLN): Global oil supply is projected to plummet by a staggering 8 million barrels per day (mb/d) in March, dropping to 98.8 mb/d its lowest level since the first quarter of 2022.

Simultaneously, massive supply chain bottlenecks and widespread flight cancellations have forced a severe downgrade in the global oil demand forecast, slashing consumption estimates for March and April by roughly 1 mb/d.

For 2026 as a whole, global oil consumption growth is now expected to reach only 640 kb/d year-over-year, a downward revision of 210 kb/d from last month's estimates, according to the newly released report by the International Energy Agency (IEA).

To combat this unprecedented tightening of the market, IEA reported that its member countries unanimously agreed on March 11 to release a historic 400 million barrels of oil from their emergency reserves.

This coordinated drawdown the largest in the agency's history aims to mitigate the severe economic impacts of the current disruptions by injecting vital government-held inventory into a starved market.

The root of this market upheaval lies in the ongoing war in the Middle East, which has created the largest supply disruption in the history of the global oil market.

Crude and oil product flows through the critical Strait of Hormuz have plunged from around 20 mb/d before the conflict to a mere trickle, currently operating at less than 10% of their pre-crisis levels.

With maritime traffic effectively halted and domestic storage tanks rapidly reaching capacity, Gulf countries have been forced to slash total oil production by at least 10 mb/d.

Forecasted March 2026 Crude Supply Cuts for Key Gulf Producers

This logistical nightmare has left an estimated 78 million additional barrels of crude oil stranded on water in the Gulf roughly equivalent to 40 Very Large Crude Carriers (VLCCs) idling as floating storage.

The downstream shocks rippling through the refining and aviation sectors are equally staggering.

With flight cancellations at some major Middle Eastern airports approaching 100%, the region's jet/kerosene demand estimates for March have been cut in half.

As buyers frantically scrambled for alternative supplies, jet fuel prices in Singapore temporarily surged to a record $240/bbl.

Furthermore, global refinery crude throughput forecasts for March have been slashed by 4.3 mb/d, with more than 3 mb/d of Middle Eastern refining capacity shut down or forced to cut runs as product storage tanks top out.

Exporters are urgently attempting to bypass the blocked Strait of Hormuz using alternative infrastructure.

Saudi Arabia is rapidly shifting flows to its 7 mb/d East-West pipeline to the Red Sea port of Yanbu, while the UAE is ramping up exports through its ADCOP pipeline to Fujairah on the Gulf of Oman.

However, these pipelines can only partially offset the massive volumes typically transported via the Strait. While benchmark crude prices soared near $120/bbl at the height of the panic before settling around $92/bbl, the market remains on edge.

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