The World Bank has warned that disruption to the global flow of oil as a result of the Iran war is now spreading and triggering a supply shock that is reducing global demand—the “largest energy supply shock on record.”
In a new report published on 7 May, the World Bank said global oil demand fell by 0.8 million barrels per day year-over-year in March, and will fall by a further 1.5 million barrels a day in the second quarter of the year.
“Oil demand destruction is emerging,” the World Bank said.
Around 20% of the world’s oil and natural gas exports normally pass through the Strait of Hormuz.
Crude prices rose approximately 65% by the end of the first month of the war with Iran—roughly $46 a barrel, the highest monthly increase on record.
According to the World Bank, global oil output will decline by 6.9 million barrels a day, or 6.6% year-over-year, in the second quarter of 2026, representing the largest quarterly decline since the COVID-19 pandemic.
Oil markets will face a deficit of 3.7 million barrels a day.
“Even if disruptions ease later this year, oil markets are expected to stay tight in the near future amid ongoing geopolitical risks, uncertain regional flows, and dislocation of shipping assets,” the World Bank said.
Crude prices will average $86 a barrel this year, before falling to $70 if supply conditions stabilize.
Prolonged conflict or disruption could push the average to between $95 and $115 a barrel.
Fertilizer prices will also rise by around 30% this year, driven by a 60% increase in the cost of urea.
“If greater disruptions drive fertilizer and other input costs even higher, knock-on impacts on food prices could push tens of millions more people into acute food insecurity globally,” the World Bank report said.
Growth predictions have also been significantly tempered. The World Bank’s projection for emerging markets and developing economies was reduced 0.4% to 3.6% from its January forecast.
Inflation was forecast to increase to 5.1% this year from an earlier forecast of 4.1%.
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3 Responses
what happens in the final days when iran says fk you all. if we can’t have it, nobody will and self destructs and destroys it’s own ports etc just to ‘teach you a lesson’?
this war was very needed to wake an ignorant world up to how fragile their fuel supply really was. Then again, a population cull is not a bad idea either. Hans was correct when he said the world is full of too many useless eaters. The ones who screech the most ARE the useless eaters. Let germany burn their windmills they so smugly shove in everyones faces come wintertime and they are freezing.
The world better figure out the new oil world order pretty soon here, and hopefully learn the lesson, never rely on one person.
What this is turning into an electric vehicle stress test for the world.
…representing the largest quarterly decline.
We are projecting government bailouts in the fall quarter for the sector.
To big to fail bullshit, let capitalism run the course with no cronyism allowed this time.
One big constructive fraud burdened upon the American taxpayers.
So the plan is working smoothly, profit out of chaos.