Middle East Oil Exports Collapse Amid U.S.-Iran War

Oil exports from eight Middle Eastern Gulf nations collapsed by 61% to 71% in the week ending March 15, 2026, marking the largest supply disruption in history. The decline followed the start of a conflict on February 28 involving the Federal government of the United States, Israel, and Iran, which resulted in the effective closure of the Strait of Hormuz. Daily exports dropped from February levels of approximately 25-26 million barrels per day (bpd) to between 7.5 and 9.7 million bpd.

Regional production plummeted as Iraq cut output by roughly 70%, the United Arab Emirates by more than half, and Saudi Arabia by 20%. The International Energy Agency estimated total shut-in production at 10 million bpd. Drone attacks further disrupted loadings at the Fujairah port in the UAE, while Saudi Arabia continued some exports via the Red Sea port of Yanbu. Floating storage of Middle Eastern crude surged to over 50 million barrels.

To mitigate the resulting physical shortage and four-year price highs, the United States temporarily de-sanctioned Russian oil. China banned fuel exports and ordered Sinopec to reduce refining rates by 10%. Although Iraq and Kurdistan agreed to restart exports via the Kirkuk-Ceyhan pipeline, the 250,000 bpd capacity is considered insufficient to offset the collapse. Market analysts warn that the crisis could push oil prices toward $200 or $250 per barrel.