Trafigura warns global oil supply loss deepens crisis

11:40

By: Dakir Madiha

Trafigura warns global oil supply loss deepens crisis

Global oil markets are facing severe disruption as major institutions warn of an accelerating supply shock linked to geopolitical conflict and restricted maritime flows. The International Energy Agency has cautioned that crude markets could enter a critical shortage phase within weeks if key transport routes remain blocked and emergency reserves continue to decline. The warning comes amid escalating instability in global energy logistics and persistent uncertainty over Middle East supply chains.

Trafigura estimates that global oil supply is currently running about 14 million barrels per day below pre-crisis levels. The assessment places the market in one of its most severe supply deficits in modern history. The company’s analysis indicates that without alternative shipping routes and pipeline rerouting, the shortfall could exceed 20 million barrels per day. The disruption has been driven largely by constrained flows from key producing regions and reduced maritime transit through strategic chokepoints.

Price effects have been immediate and broad across fuel categories. Benchmark crude and diesel prices have risen by roughly 60 percent compared with levels before the conflict, while gasoline prices have increased by more than 50 percent. Jet fuel has recorded gains exceeding 70 percent. Market participants report that even if diplomatic progress is achieved, restoring production and distribution networks to normal levels would require several months, leaving a prolonged structural supply gap.

The International Energy Agency has warned that conditions could deteriorate further if maritime flows through strategic waterways are not restored. Its latest outlook projects global oil supply could decline by 3.9 million barrels per day in 2026, a sharp downward revision from earlier forecasts. The agency has also stressed that dwindling inventories and limited spare capacity are reducing the system’s ability to absorb further shocks.

Market balances remain under additional strain from competing forecasts and policy signals. Producers continue to project resilient demand, while analysts anticipate sustained upward pressure on prices, with Brent crude expected to average above 90 dollars per barrel in 2026. Some projections suggest prices could remain elevated well into 2027 if supply disruptions persist and recovery from the current shock remains incomplete.