Oil in Freefall: OPEC Production Plunges Over 27% as Strait of Hormuz Remains Blocked

OPEC’s oil output has collapsed to levels not seen in nearly half a century, with production cuts now exceeding 27 percent amid the escalating conflict in the Middle East, according to Bloomberg.

The dramatic decline has surpassed even the historic drop recorded in May 2020 at the height of the COVID-19 pandemic. The sharp contraction is primarily the result of the prolonged closure of the Strait of Hormuz, the critical chokepoint through which nearly one-fifth of global oil supplies normally flows.

Countries in the Persian Gulf have been forced to slash output as tankers remain stranded and loading terminals idle. The blockade has sent shockwaves through energy markets, triggering a sharp surge in global oil and refined product prices.

International organisations, including the IMF, the World Bank, and the International Energy Agency, warn that even once the Middle East conflict subsides, fuel and fertiliser prices are likely to remain elevated for an extended period, threatening economic recovery worldwide.

Complicating the situation further is the ongoing American blockade of the strait. The head of a major French energy company described the U.S. measures as far more disruptive than Tehran’s earlier proposal for a paid passage system. In Brussels, EU foreign policy chief Kaja Kallas expressed open bewilderment at Washington’s approach, noting that European leaders do not understand the logic behind the blockade.

Kallas emphasised that Europe, together with international partners, stands ready to help restore safe navigation in the Strait of Hormuz — but only after hostilities have ended.

As the world’s most vital energy artery remains sealed, the crisis has exposed the fragility of global oil supplies and raised urgent questions about the future stability of energy markets in an increasingly volatile geopolitical landscape.