Impact Assessment of US/Israel-Iran Conflict

Market / War Update

• Iraq declared force majeure on all oilfields developed by foreign companies due to military operations disrupting navigation through the Strait of Hormuz, halting most of the country's crude exports.
• The Strait of Hormuz is a chokepoint for around 20% of global oil and liquefied natural gas supplies. Iraq's Oil Minister Hayan Abdel-Ghani said crude production at Basra Oil Company has been cut to 0.90 MBpd from 3.3 MBpd, straining the country's already fragile finances as it relies on crude sales for nearly all public spending and more than 90% of its income.
• Saudi Aramco, the world's top oil exporter, has cut crude supply to Asian buyers for a second month in April due to the U.S.-Israeli war with Iran disrupting trade via the Strait of Hormuz.
• The producer is supplying only Arab Light crude exported from the Red Sea port of Yanbu to term customers in Apr'26, keeping supplies to Asian refineries tight and capping their refined products output. Saudi Arabia has exported 4.36 MBpd of crude so far in Mar'26, down from 7.11 MBpd in Feb'26, and the producer is trying to boost crude exports via Yanbu to offset the Strait of Hormuz disruption.
• Indian refiners plan to resume buying Iranian oil after Washington temporarily removed sanctions to alleviate an energy crunch caused by the U.S.-Israeli war on Iran.
• Three Indian refining sources said they will buy Iranian oil and are awaiting government directions and clarity from Washington on details such as payment terms. About 170 mln bbl of Iranian crude are at sea, on ships scattered from the Middle East Gulf to the waters near China.
• The Trump administration has lent 45.2 mln bbl of crude oil from the Strategic Petroleum Reserve to oil companies to control prices that have spiked to four-year highs due to the war on Iran.
• The initial batch covers 52% of the up to 86 mln bbl the administration planned to lend, with the US aiming to lend 172 mln bbl for delivery throughout this year and into next.
• Companies awarded the initial SPR loans include BP Products North America, Gunvor USA, Marathon Petroleum, and Shell Trading. Companies will return the oil with extra barrels as a premium, a system the Energy Department says was meant to stabilize markets at no cost to American taxpayers.
• Iraq overtook Russia as India's biggest oil supplier in Feb'26, with imports from Iraq rising to two-year highs of 1.2 MBpd. Indian refiners began reducing Russian oil intake from Dec'25, with imports in Feb'26 falling 32% year-on-year to about 1.0 MBpd.
• Russian barrels remain central to India's crude import strategy, with imports potentially reaching 2.0 to 2.2 MBpd in Mar'26.

SPR / IEA

IEA member nations have agreed to a coordinated release of 400 mln bbl — the largest emergency SPR release since the IEA was founded after the 1973 Oil Crisis. The US, under the Trump administration, is contributing 172 mln bbl structured as loans to companies with repayment including a premium.

Deliveries are expected to begin reaching the market by the end of next week and will continue over approximately 120 days. The first batch of 86 mln bbl has already been opened for bidding. Japan will release 80 mln bbl beginning 16th Mar'26.

IEA Region-wise Release Breakdown — As of 15 Mar 2026

Key Supply Infrastructure

GCC Bypass Pipelines Running Near Capacity — But Shah Gas Field Ablaze and Fujairah Zone Struck

• Saudi Arabia's East–West Pipeline and the UAE's ADCOP are fully operational, providing combined bypass capacity of approximately 6.5–7.0 MBpd above pre-conflict export levels. Both lines are running at or near maximum utilisation as of mid-Mar 2026.
• Of approximately 15 MBpd of crude transiting the Strait of Hormuz in OND'25, combined SPR releases and bypass pipeline capacity can offset roughly two-thirds — or slightly more — for the next 20 to 30 days, providing the Trump administration a window to assess strategic direction.
• New strikes directly threaten this buffer — Iranian drones struck the UAE's Shah gas field (currently ablaze) and the Fujairah Oil Industry Zone on Mar 17. A tanker was also hit near the Strait of Hormuz. Saudi Arabia intercepted over a dozen drones; Kuwait and Bahrain sustained additional attacks. These represent the first direct strikes on GCC energy export infrastructure since the conflict began.

Supply & Demand Analysis

War Scenarios Point to Global Supply Deficit of 1.35–1.90 MBpd in 2026; AMJ Quarter Most Severe

Pre-war, global supply and demand were near-balanced with a modest surplus of +0.55 MBpd projected for 2026. Both conflict scenarios introduce significant supply deficits driven by Strait of Hormuz disruptions and impacts on Iraq and Kuwait crude production.

• Scenario 1 (Preferred): Exchange of attacks between US/Israel and Iran continuing, leading to severe/significant/complete disruptions of crude oil and its products trade through the Strait of Hormuz, severely impacting Iraq's and Kuwait's crude oil production over the next 3 to 6 months. Full-year 2026 deficit: −1.90 MBpd. AMJ quarter most acute at −4.50 MBpd.
• Scenario 2 (Alternate): Partial disruptions of crude oil trade through the Strait of Hormuz, with Iran not targeting ships and oil tankers moving toward China, India, and select Asian nations outside the Western alliance. Full-year 2026 deficit: −1.35 MBpd. Balance returns to flat by OND '26.

Economic Updates

• The US Dollar Index edged higher in the session, rising from 99.23 to 99.64 level marking a 0.42% increase on a daily basis, though it remains down 0.71% on a weekly basis.
• The near-term uptick was largely driven by a modest shift in rate expectations, where markets slightly pushed back the timing of cuts from the Federal Reserve, alongside a parallel rise in U.S. Treasury yields.
• At the same time, ongoing geopolitical tensions in the Middle East continued to support safe-haven demand for the dollar, adding to the upside momentum during the session.
• The Federal Reserve decided to maintain the federal funds rate unchanged at 3.50%-3.75%, emphasizing its commitment to maximum employment and returning inflation to the 2% target. While uncertainty around the economic outlook remains elevated, particularly due to developments in West Asia, the Fed slightly revised up its GDP growth projections, kept unemployment broadly unchanged, and raised inflation projections for 2026–2027, signaling a more persistent inflation outlook.

Price Outlook

Brent Expected to Trade 90–120 USD/bbl

Brent Crude 1M Futures are expected to trade in a range of 90 USD/bbl to 120 USD/bbl over the coming 1 to 2 weeks. The coordinated SPR release and GCC bypass capacity provide a meaningful supply cushion that limits sustained upside beyond these levels.