The IEA says the emergency oil release provides a temporary buffer. File Image / Pixabay

Global oil supply is projected to fall by about 8 million b/d in March as the war in the Middle East disrupts crude flows and tanker movements through the Strait of Hormuz, according to the International Energy Agency (IEA).

The conflict has sharply reduced shipments through the key oil transit chokepoint, which normally handles around 20 million b/d of crude and refined products, it said in its oil market report for March, released on Thursday

With exports severely constrained and storage tanks filling, Gulf producers have been forced to shut in significant volumes of production.

The IEA estimates that around 8 million b/d of crude output has already been curtailed, along with roughly 2 million b/d of condensates and natural gas liquids.

The agency said the global supply drop in March will be partly offset by higher output from some non-OPEC+ producers, including Kazakhstan and Russia.

The disruption has also hit refined fuel markets. More than 3 million b/d of refining capacity in the region has already shut as export routes through Hormuz remain restricted.

To help stabilise markets, IEA member countries agreed this week to make 400 million bbls of oil from emergency reserves available to the market.

“The co-ordinated emergency stock release provides a significant and welcome buffer, but in the absence of a swift resolution to the conflict, it remains a stop-gap measure,” IEA said.

The IEA said the emergency stock release will help stabilise markets in the short term, but it remains only a temporary solution if the conflict continues to disrupt shipping through the Strait of Hormuz.