Nearly Half of Global Oil Supply Now Linked to Conflict Zones as Iran War Enters Sixth Month

The global oil market is facing an unusually broad security challenge as the war involving Iran enters its sixth month, with a large share of the world's crude production now coming from countries affected by armed conflict, sanctions or serious geopolitical instability.

According to Reuters, countries caught up in or affected by major conflicts and political disruptions produced roughly 45 million barrels of oil per day in 2025. That represented more than 43% of worldwide oil supply, underlining how deeply geopolitical risk has become embedded in the energy market.

The situation is particularly significant because several major oil-producing regions are experiencing disruptions at the same time. The conflict between the United States, Israel and Iran has affected energy production and transportation across the Middle East, while the Russia-Ukraine war continues to interfere with refining and oil infrastructure. Libya and Venezuela are also contributing to the broader supply uncertainty through political instability and sanctions.

Middle East Remains the Biggest Concern

The Iran conflict has placed the Strait of Hormuz at the centre of global energy concerns. The waterway is one of the world's most important oil shipping routes, connecting producers in the Persian Gulf with international markets.

Before the war, around one-fifth of global oil and gas shipments moved through the strait. Disruptions since the conflict began have forced producers and shipping companies to find alternative routes and adjust export plans.

Saudi Arabia and other Gulf exporters have sought to redirect some shipments away from areas considered vulnerable to attacks. The Red Sea has also become more complicated for energy transportation because of security risks affecting vessels using the route toward Asian markets.

The result is a market in which physical availability is increasingly dependent not only on how much oil producers can extract, but also on whether tankers can safely transport it.

Russia-Ukraine Conflict Adds Another Layer

The Middle East is not the only source of disruption.

The Russia-Ukraine war has increasingly affected oil refining and infrastructure. Ukrainian attacks on Russian refineries have reduced processing capacity, creating additional pressure on fuel markets. Russia has also restricted gasoline and diesel exports at times as it attempts to protect domestic supplies.

These developments demonstrate how attacks on energy infrastructure can have consequences beyond crude production. Even when sufficient crude is available, shortages of refining capacity can tighten supplies of gasoline, diesel and other petroleum products.

The Global Market Has Lost a Major Buffer

The disruption has also exposed the limitations of emergency supplies.

International oil stockpile releases have helped reduce the immediate impact of lost production and shipping disruptions. However, those emergency reserves are being drawn down, reducing the cushion available if another major supply shock occurs. Reuters reported that global inventories have continued to fall as the conflict persists.

That leaves traders watching both geopolitical developments and inventory levels closely. A new attack on energy infrastructure, a major shipping interruption or a further deterioration around the Strait of Hormuz could quickly alter the market balance.

Oil Prices Have Defied Some Worst-Case Predictions

Despite the scale of the disruptions, oil prices have not remained at the extreme levels some analysts initially feared.

Several factors have helped prevent an even sharper price surge. Increased U.S. production, alternative transportation routes and emergency stockpile releases have provided some support to global supply. Softer demand in some major markets has also reduced pressure.

Oil prices nevertheless remain highly sensitive to developments surrounding Iran. Brent crude has recently traded well above levels seen before the conflict, while investors continue to assess the possibility of further disruptions.

The market's relative stability therefore should not necessarily be interpreted as evidence that the underlying risks have disappeared.

Inflation Risk Extends Beyond Energy

A prolonged period of elevated oil prices could have consequences far beyond petrol and diesel.

Higher crude prices raise transportation and manufacturing costs and can eventually feed into prices for food, consumer goods and industrial products. Countries that rely heavily on imported energy are particularly vulnerable because a more expensive oil bill can also put pressure on currencies and trade balances.

For central banks, persistent energy inflation creates an additional policy challenge. Even if economic growth weakens, policymakers may find it difficult to respond aggressively if energy costs continue pushing headline inflation higher.

A More Fragile Global Energy System

The most important development may be the concentration of oil production in politically unstable or conflict-affected regions.

With more than two-fifths of global oil supply originating from countries facing some form of conflict or major geopolitical disruption, the energy market has less room for a single crisis to occur in isolation.

For oil consumers, governments and businesses, the lesson is increasingly clear: the world's energy security is no longer determined solely by production capacity. Shipping routes, refinery availability, sanctions, military tensions and diplomatic negotiations are all becoming equally important.

As the Iran war moves beyond six months, the biggest question for the oil market is therefore not simply how much crude remains underground. It is whether producers can continue moving that oil safely and reliably to the consumers who need it.