APREX · EST. 2026
Half of the world's oil in the shadow of conflict
Nearly half of global oil production originates from regions currently involved in active military conflicts, according to Reuters, as reported by OilPrice.com. That amounts to approximately 45 million barrels per day — a figure that underscores just how exposed the world economy is to geopolitical instability.
The Middle East represents the most obvious and most disruptive example. The region is not only the world's heaviest producer — it is also a hub for global oil exports and maritime transport through strategic chokepoints such as the Strait of Hormuz.
Physical supply already under pressure
While futures markets largely reflect speculative optimism, the picture in the physical market looks far darker. According to OilPrice.com, actual crude delivery has been seriously compromised, and authorities in several countries have already resorted to emergency drawdowns from strategic petroleum reserves and introduced rationing measures.
This disconnect between financial market pricing and the operational reality of oil supply is a classic sign that the market is underestimating near-term supply risk.
Diversification has its limits
One of the more uncomfortable insights revealed by the conflict situation is that the strategy of spreading supply sources — a central principle of energy policy since the oil crises of the 1970s — is running into structural constraints. Certain production regions are simply impossible to replace in the short term, whether due to capacity, infrastructure, or geography.
For Norway and the rest of Europe, this is highly relevant: the Norwegian continental shelf and Norwegian gas exports to Europe have gained renewed strategic importance as alternative supply routes fail or come under pressure. Norway's position as a stable producer outside the most exposed conflict zones makes the country an increasingly important piece of the European energy security puzzle.
Markets' self-censorship and the real price
A recurring feature of the current situation is that speculators in futures markets — driven by short-term optimism around diplomatic signals or temporary ceasefires — are keeping the paper price of oil lower than the underlying supply situation would warrant. This is not unusual during geopolitical turmoil, but it creates a dangerous lag: when the market finally reprices the risk, it can happen quickly and dramatically.
History offers examples of this. When Brent crude rose 46 percent from late February to mid-March 2026 as a result of disruptions in the Middle East, it came as a shock to many market participants who had underestimated the physical risk, according to available research data on oil price shocks and market reactions.
What does this mean going forward?
If the conflicts in the affected regions escalate further — or spread to infrastructure such as pipelines, terminals, or key maritime routes — the physical scarcity situation could deteriorate rapidly. At that point, not even speculative optimism will be able to dampen the price surge over time.
For Norwegian players — whether Equinor, the oil fund, or Norwegian industrial companies with high energy exposure — it is worth keeping a close eye on the gap between the paper price and physical supply security. That gap is currently unusually wide.
This article was written using large language models under editorial supervision by Aprex. Content is source-verified and auditable. Read our method →