As fighting intensifies in Iran and its surrounding waters, global oil markets are bracing for a supply shock that could strip millions of barrels a day from circulation within weeks. JPMorgan has warned that the conflict could cut more than three million barrels of oil daily by the end of this week, with potential losses surpassing 4 million barrels if the war drags on.
The heart of the crisis lies in where to store oil that can't move. Producers rely on limited on-site tanks and the continual movement of oil tankers—essentially floating warehouses—to prevent shutdowns.
But with Iran threatening on Monday to attack any ship attempting to pass through the Strait of Hormuz, a chokepoint that carries about 20% of the world's oil and one-quarter of its liquefied natural gas, those tankers are now at risk. If ships stop moving, producers must stop pumping.
JPMorgan's commodity analysts said Iraq, with only three days of storage remaining, has already begun scaling back production by 1.5 million barrels a day. Kuwait could follow within two weeks if the conflict continues and spare capacity runs out. The bank projects that if the fighting lasts 15 days, daily production losses could hit 3.8 million barrels, climbing to 4.7 million by day 18.
OilPrice reported that the turmoil has already lifted prices, citing Standard Chartered Bank forecasts that Brent crude could average $74 per barrel in the first quarter of 2026, up from $62. The crisis has also upended the shipping sector. Fichte & Co, a law firm operating in Dubai and Abu Dhabi, estimated that more than 3,000 ships are now stranded on either side of the Strait and warned that maritime insurance costs—if coverage can be found—could make tanker operations financially unviable.
Standard Chartered noted that supertanker freight rates from the Middle East to China have surged from around $200,000 on February 27 to over $400,000 now, driven by war-risk bonuses and additional hazard pay for crews.
Diplomatic efforts are reportedly underway between Iran, the U.S. and Israel to de-escalate hostilities, though the situation remains volatile. Five days after U.S. and Israeli strikes began, Iran retaliated, drawing in Cyprus and Lebanon. Each passing day of conflict pushes energy markets closer to levels not seen since the previous Middle East crises.
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