The world has so far avoided a full-scale energy crisis despite what the International Energy Agency describes as the largest energy supply disruption on record, according to a new report from the Institute for Energy Economics and Financial Analysis.
Around 20 percent of global LNG supplies and 25 percent of global seaborne oil supplies have been disrupted by geopolitical tensions, creating one of the most severe stress tests ever faced by global energy markets. Yet oil prices have remained below the extreme levels many analysts feared.
Brent crude has climbed 72 percent from $61 per barrel in January to about $105 per barrel by May 21, but remains below the $120 peak reached in 2022 and well short of predictions that prices could surge to $200 per barrel. According to IEEFA, four factors have prevented a deeper crisis: high pre-crisis inventories, increased oil production from countries including the United States, Argentina, Brazil and Guyana, a decline in global oil demand of more than 2 percent, and record releases from strategic petroleum reserves.
Global oil inventories had risen by 1.2 million barrels per day during the first ten months of 2025, with China accounting for approximately 1.1 million barrels per day of the increase. Meanwhile, 76 countries have introduced energy-saving measures to reduce oil consumption.
However, IEEFA warns that these stabilizing factors are temporary. China has reportedly drawn from its estimated 1.4 billion-barrel strategic reserve, equivalent to roughly 82 days of supply at current consumption levels, while global inventories are approaching eight-year lows.
The report also highlights a structural transformation across the refining industry. Energy companies including Saudi Aramco, ExxonMobil, Shell and BP are redesigning refinery strategies to process a wider range of crude grades, reducing dependence on Middle East supplies and improving resilience against future disruptions.
Refiners are increasingly sourcing crude from North America, Latin America and Africa, while investing in refinery upgrades, crude blending capabilities and digital trading systems that allow greater flexibility in responding to supply shocks.
Despite current market stability, IEEFA cautions that spare production capacity remains limited and strategic reserves are being depleted rapidly. With significant portions of global LNG and oil trade still affected by geopolitical tensions, the energy system remains vulnerable to renewed price spikes and supply disruptions.
The report concludes that while the worst-case energy crisis has been avoided for now, declining inventories and persistent geopolitical risks mean the most challenging period for global energy markets could still lie ahead.
FASNA SHABEER
