Strait of Hormuz disruptions threaten global energy stability

The Strait of Hormuz remains a critical bottleneck for global energy stability due to ongoing disruptions in the Middle East. Fatih Birol, Executive Director of the International Energy Agency, has met with European ministers to discuss strengthening energy security as interruptions to the waterway pressure global oil supplies and stocks.

Projections suggest global oil supply could fall by 4.3 million barrels per day in 2026, as production increases in the Americas only partially offset losses from Russia and the Middle East. This scarcity has tightened markets for diesel, aviation kerosene, and gasoline, driving refining margins to record levels. While global oil demand is expected to drop by 1.6 million barrels per day this year, the depletion of strategic reserves remains a concern.

At a G20 meeting in the United States, IMF Managing Director Kristalina Georgieva warned that the energy shock resulting from the closure of the Strait is not yet over. She noted that the situation is compounded by the approaching northern hemisphere winter and rising energy demand driven by the development of artificial intelligence. Georgieva also highlighted risks to global growth, including rising public debt levels which are approaching 100% of global GDP.