The oil and gas market on the Middle East fire

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, commented on the current situation in the Middle East in terms of its impact on global energy markets to the Energy Policy magazine.

As Alexey Gromov noted, during 2025, against the background of low oil prices, a fairly serious surplus of reserves was formed on the world market, amounting to 2.5-3 million bpd at the end of February, or about 2.5—3% of global consumption. According to the IEA estimates, the total level of reserves at the beginning of the year reached 8.2 billion barrels. A large amount of reserves has been accumulated in the USA and China.

"China has been intensively building up stocks for the past year and a half, as if anticipating that the situation in the Middle East could unfold according to an escalating scenario. In February, they reached record volumes in both commercial and strategic storage facilities," the expert noted.

In addition, about 20% of the 8.2 billion barrels of reserves are "on the water."

It was the oil surplus on the market that kept prices from a crushing rally in the early days of the conflict.

"Thanks to the surplus for the first few weeks, and even possibly for a month, the market will be able to cope with the lack of supplies through the Strait of Hormuz," the expert stressed.

But if the conflict escalates and the war continues for more than a month, the market situation may change dramatically. In this case, according to Alexey Gromov, "we may well see a price tag on the global oil market above $100 per barrel."

Prolonging the conflict threatens not only rising energy prices, but also a deep recession in the global economy as a whole.