Global Oil Market Faces Potential Shortage Amid West Asia Tensions

The ongoing crisis in West Asia poses significant risks to the global oil market, with potential shortages of 7-11 million barrels per day if the Strait of Hormuz remains restricted. Choice Equity Broking highlights a structurally firmer oil price environment due to reduced supply and OPEC's low output. Predictions suggest Brent crude could average USD 89 per barrel for FY27, while diesel prices may face upward pressure. Additionally, tensions escalate as Iran threatens key shipping routes, prompting military responses from Israel. This situation raises concerns about the stability of oil supplies and pricing in the near future.

By Narendra Chaudhary Jun 8, 2026, 15:00 IST

Oil Supply Concerns Intensify

As the crisis in West Asia escalates, restrictions in the Strait of Hormuz could lead to a significant shortfall in the global oil market, potentially ranging from 7 to 11 million barrels per day, according to Choice Equity Broking. The firm anticipates a persistently high oil price environment due to ongoing supply challenges. They noted, "With continued disruptions from Hormuz and OPEC production hitting multi-decade lows, the market is facing a critical shortage of crude supply, which is likely to support higher oil prices." If the Strait of Hormuz does not reopen by the end of May, the brokerage predicts that Brent crude prices could average around USD 89 per barrel for the fiscal year 2027. Conversely, if traffic through the Strait normalizes quicker than expected, they foresee a minimum average of USD 82 per barrel for Brent futures, driven by a gradual recovery in supply and increased demand for inventory replenishment. Additionally, the report indicated that diesel prices may remain under pressure as rising crude prices and supply limitations elevate refining margins. Achieving market balance may necessitate a notable reduction in demand, particularly in sectors where diesel usage is closely tied to economic activity.

Threats to Crude Supply Persist

Risks of Attacks Loom Over Oil Supply

Recent developments have seen Iran threaten to shut down the Bab-el-Mandeb Strait, a crucial route for 7.2 million barrels per day, an increase from 3.9 mbd prior to the crisis, which has somewhat mitigated the disruptions in the Strait of Hormuz. In response to Iran's ballistic missile attacks on northern Israel, the Israeli Air Force conducted strikes on military targets associated with Iran in western and central regions, escalating tensions in the area amid fears of a potential return to open conflict. These Israeli actions occurred even as President Trump advised Prime Minister Netanyahu against retaliating for Iran's aggression.