IEA: largest oil supply disruption in history has removed at least 10 million barrels a day
Jillian Ambrose
The International Energy Agency has warned that the war in Iran has cut the region’s oil and gas production by at least 10m barrels of oil a day, as it warns that the conflict is creating “the largest supply disruption in the history of the global oil market”.
The escalating regional conflict has damaged key oil and gas infrastructure and many producers have begun shutting down production as exports via the strait of Hormuz have come to a halt and local storage facilities fill up.
In a new report, the world’s energy watchdog warned that the sharp slump in Middle East production could lead to a global slump in oil production of 8m barrels a day this year even with increased oil production from countries including Russia.
The fall in global oil supplies far exceeds the dent to global oil demand as a result of the war, according to the IEA. It has cut 1m barrels of oil a day from its global oil demand forecasts for this year due to lower refining and air travel in the Middle East.
It says:
double quotation markWith crude and oil product flows through the Strait of Hormuz plunging from around 20 mb/d before the war to a trickle currently, limited capacity available to bypass the crucial waterway, and storage filling up, Gulf countries have cut total oil production by at least 10 mb/d.
In the absence of a rapid resumption of shipping flows, supply losses are set to increase.
The impact of surging energy costs is also expected to weigh on global economic growth, which could cause demand to fall further, but the IEA said it was too soon to say how great the impact might be.
The global oil shortfall is expected to pile pressure on the market which is already reeling. The shut down of the strait of Hormuz, which carries a fifth of the world’s seaborne crude cargoes, has effectively wiped 15m barrels of oil a day to the global market leading to wild swings in market prices.
The Middle East war is creating the largest supply disruption in the history of oil markets
As a result, IEA Members have agreed to release 400 million barrels of emergency oil stocks to support market stability
More in our latest Oil Market Report ➡️ https://t.co/McMLAo4Ovn pic.twitter.com/FKwGwCd6G3
— International Energy Agency (@IEA) March 12, 2026
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Google names new HQ after Go move
Google’s new headquarter building in Kings Cross. Photograph: Nathaniel Noir/Alamy
Away from the energy crisis, Google has named its new European headquarters in London after a famous move in the game of Go.
After several delays and setbacks, Google has announced that it will finally start moving into the new building, at London’s King’s Cross (just across from Guardian Towers) this summer.
And it’s named it “Platform 37”.
This is a reference to a dastardly clever move played by the AI system AlphaGo in a game of Go against Go world champion Lee Sae Dol.
Google Deepmind’s Demis Hassabis explains in a blog post:
double quotation markGo is incredibly complex, with more possible board configurations than the number of atoms in the known universe, and has long been a proving ground for AI research. “Move 37” was so unconventional that human experts initially thought it was a mistake. But as the game unfolded, it became clear it enabled AlphaGo to win the game.
AlphaGo’s victory heralded the beginning of what is now recognized as the modern era in AI, and catalyzed our work using AI to tackle scientific problems. Since that breakthrough, our AI systems have helped accelerate advances in fields like materials discovery, fusion energy research, mathematical reasoning and biology.
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IFS: UK government should start prepping now in case energy bill support needed
The UK government should start preparing in case it needs to support households cope with surging energy prices, the Institute of Fiscal Studies says.
In a new report, the IFS point out that the shock to gas prices remains significantly smaller than during the 2022–23 energy crisis – when the Liz Truss administration capped energy bills.
But this time, the IFS says, the government finds itself in a less favourable starting position.
Bobbie Upton, research economist at the IFS, explains:
double quotation markIf prices keep rising, the government will face some difficult choices about whether – and how – to respond.
Support for households and businesses would help insure them against temporarily higher prices, but a repeat of the blanket support of 2022 would blunt incentives to reduce energy use when supplies are scarce. It would also put real strain on the already-fragile public finances.
Targeted support, backed by investments in better data, could deliver help to those who need it most at significantly lower cost to the taxpayer. With some time left before the next winter, now is the time to start preparing.”
ShareThe Liberia-flagged tanker Shenlong Suezmax in Mumbai, India, today Photograph: Francis Mascarenhas/Reuters
An oil tanker carrying Saudi Arabian crude which passed through the Strait of Hormuz after the conflict began has docked in India.
The Shenlong Suezmax oil tanker become the first India-destined vessel to safely navigate the strategic waterway since fighting erupted between the United States, Israel and Iran late last month, according to the Hindustan Times.
It briefly went “dark” to avoid detection in the region, by turning off its automatic identification system (AIS).
It reappears on Monday on tracking maps, which show it docked in Mumbai yesterday and is still there now.
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Oil at $140 could lead to “mild contractions” in eurozone, UK and Japan
Right now, Brent crude is trading just below $97 a barrel, having jumped over $100 early today after fresh attacks were reported on cargo ships in the Gulf.
But…. a sustained spike in global oil prices to $140 a barrel over a two‑month period could be sufficient to tip parts of the world economy into a mild recession, according to new analysis from Oxford Economics.
They say:
double quotation mark“The strength of the subsequent recovery will be determined by how quickly shipping through the Strait of Hormuz rebounds and how fast oil prices, supply-chain stresses, and financial market conditions ease.
The rebound in financial markets has been quick following past major military conflicts in the Middle East since the 1990s, but this this time it could be more gradual.”
They have calculated that if oil traded at $140 for two months, alongside a large rise in natural gas prices, there would be “mild contractions in the Eurozone, the UK, and Japan”.
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Goldman Sachs have cut their forecasts for growth in the UK and the eurozone this year, due to the Middle East conflict.
They now predict the UK economy will grow 1% this year (on a Q4/Q4 basis), down from 1.5% prior to the Iran war.
The eurozone is also forecast to grow by 1% in 2026, a downgrade to 0.4% since the onset of the Iran war.
They have also made more modest growth downgrades to Sweden and Switzerland, and lifted their GDP forecast for Norway slightly.
Photograph: Goldman Sachs
These changes factor in Goldman commodity team’s revised forecast that oil will average $77 a barrel in 2026.
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The IEA also admit that yesterday’s emergency release of oil stocks will only be a “stop-gap measure”, if the Middle East conflict isn’t resolved swiftly.
In today’s oil market report they say:
double quotation markThe ultimate impact on oil and gas markets and the broader economy from the conflict will depend not only on the intensity of military attacks and any damage to energy assets, but also, crucially, on the duration of disruptions to shipping through the Strait of Hormuz.
Adequate insurance mechanisms and physical protection for shipping are key to the resumption of flows, which is of paramount importance for the oil market.
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IEA: largest oil supply disruption in history has removed at least 10 million barrels a day
Jillian Ambrose
The International Energy Agency has warned that the war in Iran has cut the region’s oil and gas production by at least 10m barrels of oil a day, as it warns that the conflict is creating “the largest supply disruption in the history of the global oil market”.
The escalating regional conflict has damaged key oil and gas infrastructure and many producers have begun shutting down production as exports via the strait of Hormuz have come to a halt and local storage facilities fill up.
In a new report, the world’s energy watchdog warned that the sharp slump in Middle East production could lead to a global slump in oil production of 8m barrels a day this year even with increased oil production from countries including Russia.
The fall in global oil supplies far exceeds the dent to global oil demand as a result of the war, according to the IEA. It has cut 1m barrels of oil a day from its global oil demand forecasts for this year due to lower refining and air travel in the Middle East.
It says:
double quotation markWith crude and oil product flows through the Strait of Hormuz plunging from around 20 mb/d before the war to a trickle currently, limited capacity available to bypass the crucial waterway, and storage filling up, Gulf countries have cut total oil production by at least 10 mb/d.
In the absence of a rapid resumption of shipping flows, supply losses are set to increase.
The impact of surging energy costs is also expected to weigh on global economic growth, which could cause demand to fall further, but the IEA said it was too soon to say how great the impact might be.
The global oil shortfall is expected to pile pressure on the market which is already reeling. The shut down of the strait of Hormuz, which carries a fifth of the world’s seaborne crude cargoes, has effectively wiped 15m barrels of oil a day to the global market leading to wild swings in market prices.
The Middle East war is creating the largest supply disruption in the history of oil markets
As a result, IEA Members have agreed to release 400 million barrels of emergency oil stocks to support market stability
More in our latest Oil Market Report ➡️ https://t.co/McMLAo4Ovn pic.twitter.com/FKwGwCd6G3
— International Energy Agency (@IEA) March 12, 2026
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The latest UK real-time economic activity data highlights how energy prices spikes last week.
The Office for National Statistics reports that both electricity and gas prices jumped, saying:
double quotation markWholesale energy prices have increased in response to recent events in the Middle East, with the System Average Price (SAP) of gas increasing by 68% from 2.669 p/kWh to 4.477 p/kWh in the week to 8 March 2026, compared with the previous week; the System Price of electricity increased by 74% from 6.430 p/kWh to 11.170 p/kWh over the same period (National Gas Transmission, Elexon).
Wholesale energy prices have increased in response to recent events in the Middle East. In the week to 8 Mar, compared with the previous week, there were increases in:
· System Average Price of gas (68%)
· System Price of electricity (74%)
Read more ➡️ https://t.co/YydX4E7oQJ pic.twitter.com/wOkXCMaYvt
— Office for National Statistics (ONS) (@ONS) March 12, 2026
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UK accountants fear supply chain disruption from Middle East crisis
Phillip Inman
A survey of chartered accountants in the UK and the regions most affected by the Middle East conflict has found that a majority believe their businesses and organisations are vulnerable to supply chain disruptions and higher costs.
In a potentially disturbing re-run of the problems businesses faced at the outset of Russia’s invasion of Ukraine, 56% of nearly 500 ICAEW members polled said they were exposed to the current conflict, while over a quarter (29%) think it’s too early to judge.
The respondents, who tend to be senior staff, including finance directors based in organisations across the world, said higher energy costs and supply chain disruption were “key business concerns”.
Two thirds of UK businesses said they would be affected by higher energy costs (66%) and that government subsidies would be the most effective form of support.
Meanwhile, one of the main analysts of the UK construction sector said the industry needs “to be prepared for the worst” after a 15% year-on-year decline in the number of £100m-plus projects starting on site.
With the sector already in the doldrums, Allan Wilen, economics director at the data provider Glenigan, said:
double quotation mark“From housebuilding to major infrastructure, the shockwaves will be felt as the prospect of lower borrowing costs fade and as operational costs spiral from higher energy costs and reduced access to key structural materials.”
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UK mortgage rates rise past 5%
Average mortgage rates in the UK are continuing to climb, as the Middle East conflict drives up borrowing costs.
Hopes of a Bank of England interest rate cut in 2026 have been crushed this week, as oil soared, prompting lenders to reprice their mortgage products quickly.
Data provider Moneyfacts has reported that the average 2-year fixed residential mortgage rate has risen to 5.04%, up from 5.01% yesterday.
Five-year mortgage rates have jumped too, to 5.13%, up from 5.09% on Wednesday.
The City money markets are now indicating there’s a 96% chance that the Bank of England leaves interest rates on hold next Thursday, at its next rate-settting meeting.
They also indicate that the BoE is more likely to have raised rates than cut them by the end of the year.
Tom Bill, head of UK residential research at Knight Frank, says:
double quotation markSpare a thought for anyone sitting on a mortgage pricing committee this week.
The job of setting loan terms must be challenging when the number of rate cuts on the horizon moves around so dramatically in such a short space of time.
The reason is the roller-coaster ride on energy markets since the end of February as the Middle East conflict has unfolded.
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Russia ‘pockets €6bn in fossil fuel revenues’ since Iran conflict began
The surge in the oil price since the Iranian conflict began has proved lucrative for Russia, a report today claims.
Urgewald, the environmental and human rights organization, has calculated that Russia has pulled in €6bn in fossil fuel revenues since the war began less than two weeks ago.
Russia is earning €510m a day from fossil fuels, 14 per cent above February levels, they say, following the drop in supplies from the Middle East.
Last week, the US temporarily authorised India to buy oil from Moscow, and hinted that it could lift considering lifting more sanctions on Russian oil.
Alexander Kirk, sanctions campaigner at Urgewald, said:
double quotation mark“That is the reality of fossil fuel geopolitics. When markets panic, authoritarian exporters cash in. In less than two weeks, Russia has earned an estimated €6 billion from fossil fuel exports, money that ultimately feeds the Kremlin’s war machine.
“Easing sanctions now would not stabilise markets. What it would do is allow Russia to sell the same oil for a far better price. US sanctions have forced Russian crude to trade at a steep discount. A rollback closes that gap overnight and hands the Kremlin a revenue boost worth billions, at the very moment that pressure is starting to bite.”
“This is a political choice. Governments can hold the line on sanctions, or they can signal that if energy prices rise high enough, the West will always find a reason to blink. That choice will not just prolong Ukrainian suffering. It will undermine the security of Europe as a whole.”
ShareThe production line of an aluminium maker Photograph: China Daily/Reuters
The aluminium price is rising again today, as traders worry that the Middle East conflict will hit supplies from the region.
On the London Metal Exchange, benchmark three-month aluminium has gained 1.32% to $3,502.50 a ton, near to a four-year high.
Aluminium on the Shanghai Futures Exchange has gained 0.4% today, to 25,240 yuan ($3,669.56) per metric ton.
Neil Welsh, head of metals at brokerage Britannia Global Markets, says:
double quotation markAluminium rose for a third day as the war in the Middle East dragged on, threatening deeper supply disruptions from local producers.
Prices closed at their highest since April 2022 after the conflict forced output cuts at smelters in the region that accounts for about 9% of global output, and the Strait of Hormuz remains effectively shut. Aluminium retains significant upside, with a scope for a move toward $3,700 a ton, BMI, a unit of Fitch Solutions Inc., said in a note.
The spike in premiums in the US and Europe reflects “mounting concern among western buyers,” it added.
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