Iranian conflict causes a supply gap of 500 million barrels in the global crude oil market... International energy shocks are unavoidable

After approximately 50 days since the start of the Iran war, an analysis has revealed that over 500 million barrels of crude oil and condensate have disappeared from the supply chain in the global oil market, and the assessment that the impact on the international energy market far exceeds expectations is gaining more recognition.

On the 19th (local time), Reuters cited data from energy research firm Kpler, stating that this supply disruption is equivalent to the largest energy gap in modern history. Condensate is a super-light liquid hydrocarbon produced alongside natural gas, widely used as a raw material in refining and petrochemical industries. The simultaneous reduction of both condensate and crude oil means this goes beyond a simple decline in oil production, putting greater pressure on the overall refining and chemical industries. Ryan Mowatt, chief analyst at Wood Mackenzie, explained that the scale of 500 million barrels is roughly equivalent to halting all vehicles worldwide for 11 days or running the global economy for 5 days without crude oil. This is approximately equal to one month of U.S. oil demand, over a month of European demand, and about four months of fuel consumption by the global shipping industry.

In practice, production and export indicators in the Middle East Gulf region have also sharply deteriorated. Gulf countries lost about 8 million barrels of daily oil production in March, which is equivalent to the combined output of the largest oil companies, ExxonMobil and Chevron. Aviation fuel exports from Saudi Arabia, Qatar, the UAE, Kuwait, Bahrain, and Oman also dropped sharply from about 19.6 million barrels in February to a total of approximately 4.1 million barrels in March and April. As the core fuel for international routes and logistics transportation, the reduction in aviation fuel is likely not only an oil market issue but will also lead to increased costs for air transportation and the entire supply chain. At an oil price of $100 per barrel after the conflict, the disappearance of 500 million barrels is equivalent to about $50 billion, or approximately 74 trillion Korean won.

The market’s key concern is whether the Strait of Hormuz can return to normal. The Strait of Hormuz is a strategic chokepoint through which about 20% of the world’s crude oil and petroleum products pass. Any disruption here would directly push up international oil prices, transportation costs, and insurance premiums. However, even if the strait reopens, most forecasts believe the situation will not stabilize immediately. Johannes Laubenthal, senior crude oil analyst at Kpler, predicts that it may take 4-5 months for Kuwait and Iraq’s medium-grade oil fields to return to normal operation levels. Medium-grade oil is more viscous and involves more complex production, transportation, and refining processes, so recovery will be relatively slow once facilities are impacted. This also raises the possibility that inventory reductions could persist throughout the summer.

Furthermore, if refining facilities are damaged and large liquefied natural gas export infrastructure such as the Ras Laffan plant in Qatar is destroyed, some observers believe that full regional energy infrastructure recovery could take years. This implies that international oil prices may not only spike in the short term but could remain high for the long term. Simultaneous disruptions in crude oil and natural gas supplies will inevitably have chain reactions affecting electricity prices, air freight, sea freight, and petrochemical product prices. Such trends are likely to further intensify the volatility of the international energy market depending on future developments in the Middle East situation and the stability of strait passage.