The U.S. Government expects Middle Eastern oil production to drop by approximately nine million barrels per day in April due to the war in Iran. This severe disruption has already impacted global energy markets and U.S. stocks, with crude oil prices climbing above $115. President Donald Trump has issued a deadline for Iran to reopen the Strait of Hormuz, a critical shipping lane, or face U.S. attacks on infrastructure.
The U.S. Government expects key Middle Eastern countries to shut in over nine million barrels of daily oil production this month according to data shared on Tuesday. The forecast indicates the war in Iran has become one of the worst disruptions to global energy markets in history.
Shipments through the critical Strait of Hormuz are severely curtailed, rocking the U.S. energy market and stocks. This caused leading tech and AI stocks to sink alongside the S&P 500 and Dow Jones indexes.
The U.S. Energy Information Administration stated that Iraq, Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, and Bahrain collectively reduced crude production by 7.5 million barrels per day in March. Its Short-Term Energy Outlook estimated that number would reach 9.1 million barrels a day in April.
U.S. President Donald Trump issued an 8 p.m. ET deadline on Tuesday for Iran to reopen the Strait of Hormuz before the U.S. begins attacks on critical infrastructure. Such attacks would worsen the global energy market disruption and further harm the oil market.
Crude oil prices already climbed above $115, while Brent crude prices are above $110. Market commentators were already predicting a $150 to $200 price per barrel if the war escalates.
After Trump’s warning, Iran has kept all diplomatic channels frozen. Iranian officials called his statements “arrogant rhetoric and baseless threats” that would not hinder their operations.
Despite multiple threats, Iran has yet to open the Strait of Hormuz. Oil prices have been surging since March due to tensions from the conflict.
