The U.S. war against Iran has triggered the largest oil supply disruption in history, more than double the previous record set during the Middle East crisis of the 1950s, according to an analysis by consulting firm Rapidan Energy.
About 20% of the world’s oil supply has been disrupted for nine days now as tanker traffic through the Strait of Hormuz remains at a standstill. Crude prices have surged above $100 per barrel in response.
The biggest disruption prior to the current war was during the Suez Crisis of 1956 when Britain, France and Israel invaded Egypt’s Sinai Peninsula, the energy consulting firm told clients in a Sunday note. In that crisis, about 10% of the world’s oil supply at the time was disrupted.
Oil supply disruptions compared
| Crisis | Supply disrupted | Spare capacity available (% of World) | Capacity location |
|---|---|---|---|
| Suez Crisis (1956-57) | 10% | 35% | U.S., some in Gulf |
| Arab Oil Embargo (1973) | 7% | 8% | Saudi/Gulf |
| Iran Revolution (1978-79) | 5% | 5% | Saudi |
| Gulf War (1990-91) | 9% | 4% | Saudi |
| Iran War (2026) | 20% | 0% | N/A – Disrupted |
Source: Rapidan Energy
The disruption triggered by the closure of the Strait is nearly three times the size of the shock caused by the Arab oil embargo of 1973, Rapidan analysts told clients. The Arab embargo disrupted about 7% of global supplies.
The big difference between the supply shock of the Iran war and past crises is the world has no spare oil capacity to address the problem, the analysts said. Saudi Arabia and the United Arab Emirates hold the overwhelming majority of swing capacity but they have been cut off from the global oil market by the Hormuz closure, the analysts said.
“The conflict has not only taken offline a historically high share of global supply – it has simultaneously disrupted the primary holders of spare capacity,” the Rapidan analysts said. “The result is a market with no meaningful cushion. There is no swing producer positioned to step in.”
This means that the global oil market will need to balance by destroying demand through sharply rising oil prices, the analysts said. The U.S. Strategic Petroleum reserve is “finite and insufficient to fully offset” the supply bottled into the Persian Gulf due to the closure of Hormuz, they said.
The Strategic Petroleum Reserve currently has 415 million barrels, about 58% of its total authorized capacity of 714 million barrels, according to the Department of Energy.
A White House official told CNBC on Friday that the Trump administration believes “the oil markets remain well supplied and if we need to take additional action, we will do so.”
Member states of the International Energy Agency will come under pressure to release their strategic stocks because this is “the only remaining supply response option,” the Rapidan analysts said.
The Group of Seven finance ministers were expected to meet at 8:30 a.m. ET to discuss a possible joint release of oil reserves coordinated by the IEA, people familiar with the matter told The Financial Times.
