Global Oil Market Faces 'Unprecedented Crisis' Due to Iran War, Says Russia

Russia's Deputy Prime Minister Alexander Novak has described the current state of the global oil market as an "unprecedented crisis," emphasizing that such a situation has not been witnessed even in the 20th century. The conflict in Iran has significantly disrupted supply chains, leading to a substantial reduction in available crude oil.

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Without a doubt, what is happening in the global markets is an unprecedented crisis. Nothing like this has ever happened, not even in the 20th century.

Novak noted that approximately 12 million barrels of oil per day are currently not reaching the market. He explained that the market has managed to absorb the initial impact over the past three months due to existing reserves and previous market surpluses. However, he warned that if the conflict persists, oil extraction from Persian Gulf countries will not increase, inevitably leading to a deficit in the coming months.

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because close to 12 million barrels per day are not reaching the market.

Despite the severe disruptions, Novak highlighted the crucial role of OPEC+ in managing market volatility. He pointed out that the expanded cartel accounts for over 50% of global oil extraction and more than 40% of international market exports. "Therefore, in any case, OPEC and our agreements within the framework of OPEC+ demonstrate their effectiveness and allow us to reduce market oscillations and volatility," he stated.

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If the conflict continues to drag on, extraction from the Persian Gulf countries will not grow. And this, naturally, will imply a deficit within several months.

The situation underscores the fragility of global energy markets and the significant impact geopolitical events can have on supply and prices. The ongoing conflict and its consequences on oil production present a complex challenge for international energy security and economic stability.

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Therefore, in any case, OPEC and our agreements within the framework of OPEC+ demonstrate their effectiveness and allow us to reduce market oscillations and volatility.