Global oil demand may not recover from its dip this year due to the current crisis until 2028 or 2029.

The global oil market is dealing with the consequences of the war in the Middle East. Beyond the direct damage to energy infrastructure in the region, the crisis has almost brought tanker movements through the Strait of Hormuz to a halt. With almost 20 mb/d of crude and product exports currently disrupted, and with limited alternative options available to bypass the world’s most critical oil transit chokepoint, producers and consumers around the world are beginning to feel the strain. Since the outbreak of hostilities on 28 February, benchmark crude oil prices have surged by $20/bbl. to $92/bbl, with even bigger increases across product markets.

 Predictions of industry leaders.

However, at a conference in London on Monday, industry leaders predicted that shipping delays, significant reductions in refinery output, and inventory shortages that would take years to replenish would drive up global oil prices well into the future. This comes as the US and Israel launched a military offensive against Iran at the end of February. Iran then effectively closed the Strait of Hormuz. This choked exports through one of the world's most crucial shipping bottlenecks.

 Attacks on oil and gas infrastructure.

The impact has been compounded by attacks on oil and gas infrastructure, with production being hampered and the disruption of crude oil and refined fuel exports being added to. “I think it is going to be chaotic until the end of the year and possibly into 2027,” said Petronas CEO Tengku Muhammad Taufik.

Related: US is paving the way for the return to service of the oil tankers of the shadow fleet.

The Energy Intelligence Forum in London 

In his inaugural conference address since the commencement of hostilities in Iran, Amin Nasser, the chief executive of the world's most substantial oil company, Saudi Aramco, informed the Energy Intelligence Forum in London that it might take as long as two years to replenish global stockpiles. These have been tapped as a contingency measure.'Until Hormuz fully reopens and confidence returns, the crude reality is that pressure at both ends of the barrel will intensify. Even then, replenishing inventories while meeting demand could take up to two years,” he said.

The term 'both ends of the barrel

The term 'both ends of the barrel' refers to both unrefined crude oil and refined products such as diesel and jet fuel.He added that three billion barrels have been lost since the start of the conflict and that one billion barrels have been withdrawn from global inventories.

Six million barrels of fuel per day are missing.

Kuwait Petroleum Corporation CEO Shaikh Nawaf Al-Sabah said that the focus was on transporting more refined fuels to global markets and restoring Middle Eastern refineries to full production, as the impact of the war in Iran has left the world with a shortfall of six million barrels per day of refined products.“There is not enough refining capacity in the world to make up for the capacity that has been shut down in the Gulf of the Middle East,” said Shaikh Nawaf.Despite the war-related disruptions, Kuwait’s crude oil exports have held up at around one million bpd this year, even as production has fallen from around 2.6 million bpd to two million bpd, Al-Sabah told the conference.

Demand recovery beyond next year

ConocoPhillips’ Executive Chair, Ryan Lance, said that global oil demand may not recover from its dip this year due to the current crisis until 2028 or 2029. However, he added that demand would grow thereafter. He said that the oil price floor for US benchmark WTI crude would rise to around $70 per barrel, with a mid-cycle price of $65–$70 per barrel.

US oil production

If prices remain strong, US oil production could exceed 14 to 14.5 million barrels per day. He did not specify what he meant by 'strong'. Brent crude futures were trading just above $100 per barrel on Monday, while WTI was close to $90 per barrel. (Reporting by Stephanie Kelly, Shadia Nasralla, Robert Harvey and Anushree Mukherjee; editing by Joe Bavier, Louise Heavens and Barbara Lewis).

Related: Saudi crude exports collapse to a nine-year low as tanker attacks squeeze Hormuz

The shutdown of several refineries and gas processing facilities

It is noteworthy that attacks and safety concerns have led to the shutdown of several refineries and gas processing facilities. This is in addition to the disruption that has affected upstream production and exports. The closure of the Strait is forcing export-oriented refineries to reduce production or close completely as product storage tanks fill up. More than 4 mb/d of refining capacity is at risk. In 2025, Gulf producers exported approximately 3.3 mb/d of refined products and 1.5 mb/d of LPG. While additional throughput in other regions is possible, the availability of feedstock will be a limiting factor. Product exports restrictions have been implemented by some countries as a result. The diesel and jet fuel markets are particularly vulnerable to an extended loss of Middle Eastern production and exports given the limited ability to increase output elsewhere.

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