The US-Iran war has triggered one of the biggest oil supply disruptions in history, yet crude prices have largely seen only a limited spike so far, according to Business Today. The conflict shows no sign of ending, and the global oil market may have survived the first few months relatively unscathed — but what if the war doesn't end for another six months? That is the question facing the global economy and India, which Business Today says may be absorbing an oil shock that is "snowballing slowly" and could hit hard. The article cites a chart showing real oil prices remained below the highs reached during earlier crises.
Emergency buffers: the 400-million-barrel release
As traffic through the Strait of Hormuz came to a standstill, the International Energy Agency (IEA) responded in March by announcing the emergency release of 400 million barrels of oil from member countries' reserves, according to Business Today. This was the largest ever coordinated release of oil stocks. The IEA also said more supply would be released if the situation worsened. Meanwhile, the US has been drawing down its Strategic Petroleum Reserve, which a Reuters report says is now at its lowest since January 1983.
China's decision to reduce its demand for oil imports and use up its strategic reserves has been a big factor in keeping the demand-supply gap from widening, the source reports. While the supply loss from the Gulf is estimated at around 11 million barrels per day, the gap compared with demand is only around 5 million barrels per day. By some estimates, current global crude oil inventory should cover several months, though the calculation is tricky because not all inventory can be assumed available for release.
| Metric | Amount |
|---|---|
| Gulf supply loss (estimate) | ~11 million barrels/day |
| Resulting supply-demand gap | ~5 million barrels/day |
| IEA emergency release announced in March | 400 million barrels |
| Global oil supply fall this year (IEA) | 4.3 million barrels/day (~4%) |
| Cumulative oil lost since conflict began (Saudi Aramco estimate) | 2.6 billion barrels |
| Days of pre-war global consumption affected | around 25 days |
| IEA government and commercial stock cover at current gap | ~300 days (theoretical) |
Supply-side intelligence: EIA outlook and Saudi Aramco's 2.6-billion-barrel loss
In its August outlook on oil, the US Energy Information Administration (EIA) estimates that it will take until early 2027 for oil production and trade patterns to generally return to pre-conflict status. The EIA also expects oil prices to stay high for some time.
"Because of the large drawdown in global inventories triggered by continued disruptions in the Strait of Hormuz, we forecast that oil prices will remain elevated until global oil flows return to normal and oil inventories are replenished," the EIA said, as quoted by Business Today.
On the physical side, Saudi Aramco has estimated that the world has lost as many as 2.6 billion barrels of oil since the conflict started — the largest cumulative disruption the world economy has seen apart from the 1979 Iranian revolution. That means around 25 days of pre-war global consumption has been hit. The IEA says global oil supply will fall by 4.3 million barrels per day, around 4%, this year.
According to a Reuters analysis, global oil stocks are under pressure, and the scale of disruption is particularly difficult to determine because the length of the conflict is unknown. Reuters reported that total government and commercial stocks with the IEA are theoretically sufficient to cover the current 5 million barrels per day supply gap for around 300 days.
Demand-side picture and India's exposure
On the demand side, the source highlights China's reduced appetite for oil imports and its reliance on strategic reserves as a major helper in controlling the widening gap. For India, Business Today's framing is about how long the country can survive if the oil shock continues to snowball — with the conflict still showing no signs of ending. The article also linked to a related read titled "Beijing's billion-barrel weapon: Why India must prepare for China-driven oil prices," indicating that shifts in Chinese stockpiling behaviour are being watched closely by Indian policymakers and market participants.
Price outlook: what to watch next
The EIA's August outlook sees prices remaining elevated until global oil flows normalise and inventories are rebuilt, which it expects to take until early 2027. The key unknown, according to Reuters, is the length of the war; the longer it runs, the harder it becomes to determine whether reserves will be sufficient to prevent a bigger crisis. Business Today's core question — how long the world and India can absorb the shock — remains open, with the answer depending on continued strategic releases, Chinese import behaviour, and whether the Strait of Hormuz disruption persists beyond the first few months of the conflict.
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