JPMorgan analysts warned crude supply cuts could reach nearly 12 million barrels per day as Iran war disrupts Middle East tanker traffic, threatening global energy markets.
The investment bank’s commodity team said production losses could exceed four million barrels daily if the conflict persists, creating the largest supply disruption in recent history.
Key Takeaways
- Supply cuts may reach 12 million barrels daily by week-end
- Iraq most vulnerable with only three days storage capacity
- Strait of Hormuz tanker traffic severely constrained by attacks
Market reaction & context
Oil prices surged above $100 per barrel as traders priced in escalating supply risks from the Middle East conflict 1. Brent crude jumped more than 25% during volatile overnight trading, reaching levels not seen since 2022 as Iran’s threats to close the Strait of Hormuz intensified 2.
The waterway handles roughly 20% of global seaborne oil trade and serves as the main export route for major producers including Saudi Arabia, Iraq, the United Arab Emirates, Kuwait and Qatar 3. Any prolonged disruption could push oil prices toward $150 per barrel, according to analysts 4.
Production shutdowns accelerate
Iraq has emerged as the most vulnerable supplier in the crisis, already shutting in 1.5 million barrels per day of production due to storage constraints and export bottlenecks. The country has only three days of storage capacity remaining, while Kuwait had two weeks’ worth before being forced to cut production 5.
“Iraq is the most vulnerable, with three days of storage space, while Kuwait had two weeks’ worth of storage before it was forced to start cutting production,” JPMorgan commodity analysts said in their latest note 6. The bank estimates Iraqi shutdowns could expand to three million barrels daily, effectively halting most of the country’s crude exports.
Timeline of escalating disruption
JPMorgan’s analysis shows supply losses intensifying rapidly if hostilities continue. By day 15 of the conflict, shut-in production across the Gulf could reach 3.8 million barrels per day, rising to roughly 4.7 million barrels daily by day 18 as logistical challenges force producers to curb output 7.
Iran has warned it would attack any tanker attempting to enter the Strait of Hormuz, with a Revolutionary Guards adviser declaring: “The strait is closed. If anyone tries to pass, the heroes of the Revolutionary Guard and the regular navy will set those ships ablaze” 8.
Infrastructure under pressure
Energy facilities across the region face mounting security threats. Saudi Aramco temporarily shut its largest domestic refinery following drone attacks, while QatarEnergy declared force majeure on liquefied natural gas shipments after Iranian strikes disrupted key processing facilities 9.
Ship-tracking data from Vortexa and Kpler shows tanker movements through the Arabian Gulf have dropped sharply as insurers and shipping companies reassess risks. Hundreds of oil tankers are currently stranded in the Gulf, unable or unwilling to transit through the strait amid escalating security concerns 10.
Policy response considerations
President Trump said earlier this week the United States is considering offering tanker insurance and naval escorts for vessels in the Persian Gulf “if necessary” to keep vital shipping lanes open 11. The administration faces mounting pressure to address rising energy costs that threaten to undermine economic gains from lower inflation and cheap oil.
Despite spare production capacity in Saudi Arabia and the UAE that could offset some lost output, analysts warn alternative export routes can only handle about one-third of normal Strait of Hormuz oil flows. The logistical constraints mean even available spare capacity may not reach global markets effectively during a prolonged crisis.
Not investment advice. For informational purposes only.
References
1Irina Slav (March 4, 2026). “JP Morgan Warns of Catastrophic Oil Supply Loss from Middle East War”. OilPrice.com. Retrieved March 13, 2026.
2Irina Slav (March 3, 2026). “JP Morgan Warns of Catastrophic Oil Supply Loss from Middle East War”. Yahoo Finance. Retrieved March 13, 2026.
3Issac John (March 5, 2026). “War threatens up to 4m bpd in supply as oil rally deepens”. Khaleej Times. Retrieved March 13, 2026.
4“Oil at $100 as Iran War Breeds Supply Panic-J.P. Morgan’s $60 Target Lags in Volatility Storm” (March 11, 2026). AInvest. Retrieved March 13, 2026.
5Irina Slav (March 4, 2026). “JP Morgan Warns of Catastrophic Oil Supply Loss from Middle East War”. OilPrice.com. Retrieved March 13, 2026.
6Irina Slav (March 4, 2026). “JP Morgan Warns of Catastrophic Oil Supply Loss from Middle East War”. OilPrice.com. Retrieved March 13, 2026.
7Issac John (March 5, 2026). “War threatens up to 4m bpd in supply as oil rally deepens”. Khaleej Times. Retrieved March 13, 2026.
8Irina Slav (March 4, 2026). “JP Morgan Warns of Catastrophic Oil Supply Loss from Middle East War”. OilPrice.com. Retrieved March 13, 2026.
9Issac John (March 5, 2026). “War threatens up to 4m bpd in supply as oil rally deepens”. Khaleej Times. Retrieved March 13, 2026.
10Issac John (March 5, 2026). “War threatens up to 4m bpd in supply as oil rally deepens”. Khaleej Times. Retrieved March 13, 2026.
11Irina Slav (March 4, 2026). “JP Morgan Warns of Catastrophic Oil Supply Loss from Middle East War”. OilPrice.com. Retrieved March 13, 2026.