The global oil crisis driven by the war in Iran is now shifting from a transportation disruption to a deeper production shock, with the closure of the Strait of Hormuz beginning to force oil producers across the Gulf to shut wells as storage fills up, S&P Global Energy said in a note.
Shift from transit delays
“The first week the crisis was a transportation issue, which could conceivably be resolved quickly. But it is turning into a producibility concern as well due to storage constraints. Re-starting field production of this scale will be a massive technical exercise that could last weeks or more to fully restore output. Downstream and other oil infrastructure damage could potentially limit the pace of recovery of oil flows also, including refined products,” said Jim Burkhard, vice-president and global head of crude oil research at S&P Global Energy.
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The conflict, now entering its second week, has effectively shut the Strait of Hormuz for more than eight days, removing roughly 17 million barrels per day (b/d) of crude oil and petroleum products from global supply since February 27, according to S&P Global estimates.
The Strait of Hormuz is one of the world’s most critical energy corridors, with around 21 million b/d of oil exports normally passing through the narrow channel linking the Persian Gulf to global markets.
While tanker movement through the strait was initially halted due to security concerns, the disruption has now begun affecting upstream production as exporters struggle to store unsold crude.
Iraq has already shut in around 2 million b/d of production due to storage constraints, while Kuwait has also reduced output and other regional producers may be preparing to cut production as storage capacity fills, the report mentioned.
Production in Iraq’s southern oil fields, a major export hub for global markets, has reportedly fallen sharply from about 3.3 million b/d to 1.3 million b/d, underscoring the scale of the disruption.
Asian Markets
The impact of the crisis is being felt most acutely in Asia, which remains the largest buyer of Gulf crude.
S&P Global estimates that Asia purchased about 80% of the 21 million b/d of oil exports that transited the Strait of Hormuz before the conflict, making the region particularly exposed to supply shocks.
Crude delivered to Asian markets had already crossed $100 per barrel last week, while prices for refined fuels such as jet fuel and diesel surged to record levels during the first week of the conflict.
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“It is in Asia where signs of market duress are most evident. Half of the crude oil processed in Asia in 2025 came from the Middle East Gulf region,” Burkhard said.
Countries across the region have already begun responding to tightening supplies.
China and Thailand have introduced restrictions on refined product exports, and S&P Global expects additional countries to follow if the disruption in Gulf supplies continues.
“The longer the Strait of Hormuz remains effectively shut, the worse the impact on physical supplies, inventories and prices—and not just in Asia,” he added.
TOPICSStrait of HormuzThis article was first uploaded on March eleven, twenty twenty-six, at fifty-two minutes past six in the evening.