IEA Warns April Oil Crunch Will Be Worse. Reserves Are Running Thin.

The International Energy Agency said Wednesday that global oil supply conditions will worsen in April as Strait of Hormuz disruptions enter their fourth week and strategic petroleum reserves approach their practical limits.

IEA member countries have released 400 million barrels from emergency stockpiles since mid-March, the agency said in an extraordinary market update. The US Department of Energy announced an additional 10 million barrel emergency exchange on Wednesday, its third such action in two weeks.

Brent crude closed at $116.40 a barrel on Tuesday before surging further on President Trump's national address. West Texas Intermediate settled at $112.70. Both benchmarks are at their highest sustained levels since 2014.

Hormuz Bottleneck Tightens

Approximately 20.5 million barrels per day normally transit the Strait of Hormuz, according to the US Energy Information Administration. Iranian naval operations have reduced that flow by an estimated 18% over the past three weeks, the IEA said.

Insurance premiums for tankers transiting the strait have risen 340% since March 12, according to Lloyd's of London data. Several major shipping companies, including Maersk and Frontline, have suspended Hormuz transits entirely, rerouting via the Cape of Good Hope at significant cost and delay.

"Rerouting adds 10 to 14 days to voyages from the Gulf to Europe and 7 to 10 days to Asian destinations," said Anoop Singh, head of tanker research at Braemar. "That removes effective tonnage from the market even if no ships are sunk."

Consumer Price Shocks Spread

The energy squeeze has begun hitting consumers directly across multiple countries. The United Arab Emirates, itself an oil-producing nation, raised petrol prices by 33% and diesel by 72% for April — the steepest monthly increase in the country's history, according to the UAE Fuel Price Committee.

India briefly doubled aviation turbine fuel prices to 2.07 lakh rupees per kilolitre before public backlash forced the government to reverse course. The Ministry of Petroleum announced a staggered 8.5% monthly increase instead, according to a statement released Wednesday.

Diesel prices across Southeast Asia have risen 81% in four weeks, according to CEIC data. Thailand, the Philippines, and Vietnam have all imposed temporary fuel price caps, though economists warn the measures will strain government budgets.

Reserve Limits

The IEA's 31 member countries held a combined 4.1 billion barrels of emergency oil stocks before the crisis began. At the current drawdown rate of roughly 15 million barrels per day above normal, practical reserve limits will be tested by late April, according to the agency.

"Strategic reserves were designed for 90 days of import cover in a supply disruption," said Fatih Birol, the IEA's executive director. "We are drawing on them at a rate that assumes this conflict ends soon. If it does not, we will need to consider coordinated demand reduction."

The United States entered the crisis with approximately 390 million barrels in the Strategic Petroleum Reserve, already near historic lows after drawdowns in 2022. The three emergency releases since March 15 have reduced that figure to roughly 350 million barrels, according to DOE data.

Japan and South Korea, which import nearly all their oil, have released proportionally larger shares of their reserves. Japan's Ministry of Economy, Trade and Industry said Wednesday it had authorised private-sector stockpile releases for the first time since 2011.

Houthi Threat Compounds Risk

Compounding the Hormuz disruption, intelligence agencies reported that Iran has been pushing Houthi forces in Yemen to resume attacks on Red Sea shipping, according to US Central Command. A renewed Houthi campaign would threaten the Bab al-Mandab strait, the second-most important oil transit chokepoint after Hormuz.

"If both chokepoints come under threat simultaneously, there is no historical precedent and no contingency plan," said Sara Vakhshouri, president of SVB Energy International.

The IEA said it would hold an emergency ministerial-level meeting on April 8 to discuss coordinated demand reduction measures if the conflict has not de-escalated by then.