Shell CEO Wael Sawan stated during the company's first-quarter earnings call that the oil market is facing a shortage of nearly one billion barrels due to the ongoing Iran war, with the deficit worsening daily as the conflict continues in the Middle East [1]. Sawan emphasized that recovering the lost supply will be a lengthy process, noting that the world consumes about 100 million barrels of oil per day, according to OPEC data [1]. Halliburton CEO Jeffrey Miller corroborated this estimate, saying that oil production lost due to the war is trending toward a billion barrels and that recovery will not be quick or simple [1]. The International Energy Agency described the situation as the biggest supply disruption in history, with Iran effectively blockading the Strait of Hormuz, through which about 20% of global oil supplies previously passed before the U.S. and Israel attacked on February 28 [1].
Despite the supply shock, demand destruction has been modest so far, with jet fuel consumption in the airline industry down by around 5%, according to Sawan [1]. Oil prices have fallen more than 10% since Tuesday on renewed hopes that the U.S. and Iran will strike a deal to end the war and reopen the strait [1]. However, Chevron CEO Mike Wirth and Exxon Mobil CEO Darren Woods warned that it could take months for oil exports through Hormuz to return to normal after the conflict ends, citing the need for mine clearance and redeployment of hundreds of stranded ships [1].
Meanwhile, Iran is "currently reviewing" messages from the U.S. sent via Pakistani mediators, but has not yet responded, according to an Iranian foreign ministry spokesman [2]. President Donald Trump expressed optimism, predicting the war will "be over quickly" and stating that the U.S. will see if Iran "can make a deal that's satisfactory to us" [2]. Reports indicated that the U.S. and Iran were nearing a 14-point memorandum of understanding to end the war and initiate further nuclear talks [2]. The prospect of a resolution sent stocks higher and oil prices lower on Wednesday, but equities fell and oil prices resumed their rise on Thursday afternoon as negotiations remained uncertain [2].
The U.S. launched "Project Freedom" to guide stranded ships out of the Persian Gulf, but paused the effort due to progress in negotiations and Saudi Arabia's opposition, which led to the suspension of U.S. military access to Saudi bases and airspace [2]. Saudi Arabia and Kuwait have since lifted those restrictions, and the Trump administration is considering restarting Project Freedom [2]. Senior Iranian official Mohsen Rezaee stated that Tehran would not allow the U.S. to reopen the strait with "an unrealistic plan," insisting that any deal must provide "tangible benefits" for Iran [2].
CONCLUSION
The Iran war has triggered an unprecedented oil supply shortage, with industry leaders warning of a slow recovery even if peace is achieved. While diplomatic efforts and market optimism have temporarily eased oil prices, ongoing uncertainty and logistical challenges suggest continued volatility. The outcome of negotiations and the reopening of the Strait of Hormuz will be critical for global energy markets.