IEA: Global crude throughputs continue to struggle

April 16 ------ A two-week ceasefire announced last week in the Middle East brought a brief sense of relief to global oil markets, just as supply disruptions were beginning to ripple across the world, according to the IEA April Oil Market Report.

Despite the ceasefire agreement, it remains uncertain whether this pause will lead to lasting peace and the resumption of normal shipping through the Strait of Hormuz, according to the International Energy Agency (IEA). As oil-importing countries rush to secure replacement barrels from an increasingly tight supply pool, physical crude prices have surged to record highs near $150 per barrel—well above futures markets—widening the gap between paper and physical pricing. Refined products have climbed even more sharply, with middle distillate prices in Singapore hitting all-time highs above $290 per barrel.

Restoring flows through the Strait of Hormuz remains the single most critical factor in easing pressure on global energy supplies, prices, and the wider economy. Adding further uncertainty, the latest development in the fast-moving situation is a reported US blockade on vessels entering or leaving Iranian ports and coastal waters, expected to take effect shortly after the time of writing.

In early April, traffic through the Strait remained heavily constrained, with crude oil, natural gas liquids, and refined product loadings averaging just 3.8 mb/d, compared with more than 20 mb/d in February, before the crisis began. To compensate, exports via alternative routes—particularly from Saudi Arabia’s west coast, Fujairah on the UAE’s east coast, and the Iraq–Türkiye pipeline to Ceyhan—rose to 7.2 mb/d, up from less than 4 mb/d prior to the conflict. Even so, total lost export capacity exceeds 13 mb/d, with production curtailments and damage to regional energy infrastructure driving cumulative supply losses of over 360 mb in March and a projected 440 mb in April.

Furthermore, to manage the shortfall, both consumers and refiners have drawn heavily on inventories. Global observed oil stocks fell by 85 mb in March, despite builds in onshore and offshore storage in the Middle East and additional stockpiling in China. The steepest declines came from oil held at sea, as shipments from Gulf producers reliant on the Strait nearly halted. In Asia, crude inventories in importing countries dropped by 31 mb, with further drawdowns expected in April.

Where inventories have been insufficient to bridge the gap, demand has started to weaken. Asian petrochemical producers have reduced operating rates due to feedstock shortages, while LPG users in households and businesses have also been affected. Meanwhile, widespread flight cancellations across the Middle East, parts of Asia, and Europe have sharply reduced jet fuel consumption.

In response, an increasing number of countries have introduced demand-reduction policies, while others have implemented measures to cushion consumers from higher fuel costs. As a result, global oil demand is estimated to have contracted by 800 kb/d year-on-year in March and by 2.3 mb/d in April. For 2026, global oil demand is now projected to decline by an average of 80 kb/d, a sharp reversal from the 730 kb/d growth forecast in last month’s report.

Looking ahead, the prospects for a durable negotiated settlement remain highly uncertain. This report assumes a gradual resumption of regular oil and gas flows from the Middle East to global markets by mid-year, though not a full return to pre-conflict levels. "We recognize that this scenario could prove too optimistic, considering the high degree of uncertainty over how the situation may develop. We also present an alternative case where risks to energy production and trade in the Middle East remain high due to a prolonged conflict. In this case, energy markets and economies around the world need to brace for significant disruptions in the months to come," IEA highlights.

To remind, the heads of the International Energy Agency (IEA), International Monetary Fund (IMF) and World Bank Group met on 13 April under the coordination group formed earlier in the month and urged countries to refrain from stockpiling energy resources or introducing export restrictions.

Source: safety4sea.com