Brent crude prices are being propped up by the largest disruption in global oil supplies on record, as conflict around the Strait of Hormuz threatens a prolonged shock to energy markets, according to analysis from Société Générale and the International Energy Agency (IEA).
Strait of Hormuz disruption risks up to 2 million bpd of Iranian supply
Data from Société Générale indicate that potential transit restrictions through the Strait of Hormuz could remove between 1.5 million and 2.0 million barrels per day (bpd) of Iranian crude from the global market through at least mid-May. The strait handles nearly one-fifth of the world’s oil flows, making it one of the most critical maritime chokepoints for energy.
Following the breakdown of talks in Islamabad, US President Donald Trump signaled steps toward effectively closing the passage. Société Générale analysts now expect the strait to function only under restricted conditions, with one section affected by Iranian transit controls and another threatened by sea mines, limiting normal tanker traffic.
IEA calls it the largest supply disruption in oil market history
The IEA has described the disruption as the “largest supply disruption in the history of the global oil market.” Agency data show global oil supply slumped by 10.1 million bpd in March alone, an unprecedented drop that has triggered acute shortages and forced a rapid redirection of trade flows.
The imbalance between supply and demand is expected to widen as Iranian exports remain constrained, with market tightness likely to last at least into mid-May.
Supply shortfall seen at nearly 8 million bpd in April
Société Générale’s updated balances, which factor in rerouting of cargoes, strategic reserve releases and some demand destruction, point to a projected global supply shortfall of 7.9 million bpd in April and 6.1 million bpd in May.
These figures push back the bank’s expected timeline for market stabilization from late April to around mid-May, suggesting at least several more weeks of strained physical supply conditions.
Global inventories show heavy drawdowns
Since the conflict began, global oil inventories have already fallen by an estimated 190 million barrels, Société Générale calculates. Current stocks are pegged at roughly 7.9 billion barrels worldwide, including 6.2 billion barrels on land and 1.7 billion barrels stored offshore.
Official March data highlight the scale of the drawdown: observed global inventories declined by 85 million barrels during the month. Excluding the Middle East Gulf, the drop is even steeper, with stocks elsewhere shrinking by about 205 million barrels. The figures underscore the extent to which consumers are leaning on stored crude to offset disrupted seaborne flows.
Brent swings between $95 and above $100, with risk of a move to $150
Price action has mirrored the geopolitical uncertainty. Brent crude futures recently retreated to around $95 per barrel on renewed hopes of US–Iran talks, after briefly surging above $102 per barrel when the blockade was first announced.
Analysts at major financial institutions warn that a sustained two-month closure or severe restriction of the Hormuz corridor could still propel Brent toward an average of about $125 per barrel in April, with the potential for short-lived spikes up to $150 per barrel if further supply losses materialize.
US builds crude stocks as global demand forecast turns negative
Against the backdrop of tightening global supplies, US data have provided a modest counterweight. The American Petroleum Institute reported an unexpected build of 6.1 million barrels in US crude inventories last week, suggesting domestic stock levels are temporarily cushioning some of the global shock.
At the same time, the IEA has revised its full-year demand outlook, now projecting a contraction of around 80,000 bpd for the year. The agency attributes the weaker consumption outlook largely to persistently high prices and mounting pressure on fuel-intensive industries and households.
Market outlook depends on diplomacy and Hormuz flows
Forward curves and spot prices now hinge largely on fast-moving diplomatic developments. The head of the IEA has stressed that restoring stable flows through the Strait of Hormuz is the single most important factor for easing pressure on supplies and on the broader global economy.
Traders are closely watching any sign of de-escalation. Even partial or fragile truces have already allowed some supertankers to pass, providing limited relief to supply chains. Market participants are therefore highly sensitive to any progress in negotiations that could normalize transit through the chokepoint and temper the current supply shock.
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