Global oil market faces critical 4.8 million barrel daily deficit amid West Asia disruptions. The supply shortage stems from Strait of Hormuz restrictions cutting 15 mbpd, only partially offset by IEA strategic reserves and alternative routes providing 6.2 mbpd. Market rebalancing will occur through demand destruction as elevated prices curb consumption globally. The IEA projects oil demand contraction of 1.5 mbpd in Q2 2026, with sharper April declines around 2.3 mbpd. Initial demand slowdown concentrates in Middle East and Asia-Pacific regions but will likely spread as supply remains tight and prices stay elevated. Higher crude prices are expected to apply downward pressure on consumption patterns across consuming nations.
