Why the IMF Is Warning of a Multi-Month Fuel Crisis
The International Monetary Fund is sounding the alarm about a fuel crisis that could last several months and slow down economies around the world.
A conflict near the Strait of Hormuz has disrupted oil shipments and shut down wells across the Middle East. Such disruptions can trigger supply chain shocks that ripple through global markets.
Even if peace comes tomorrow, restarting production takes time. Empty tankers must travel through Hormuz first and then reach loading terminals before oil flows again. Think of it like refilling a giant bathtub with a tiny faucet.
The IMF also warns people against hoarding fuel, which would only make shortages worse for everyone. IMF managing director Kristalina Georgieva specifically cautioned against export controls that deepen global supply imbalances.
How the Hormuz Blockade Cut Off Global Oil Supply
At the center of the IMF’s worry is one narrow waterway: the Strait of Hormuz. Think of it as a busy highway for oil tankers. In peacetime it carries 20 million barrels daily — about 20% of the world’s oil supply. Monetary policy can amplify the economic fallout from supply shocks by influencing inflation expectations and financial market reactions.
When President Trump ordered a naval blockade on April 13, 2026, that highway nearly closed. Wartime flow dropped to just 2 million barrels per day. Iranian crude stopped completely. Prices jumped 8% almost immediately. Physical crude in Europe hit $150 per barrel. Analysts warned prices could climb even higher if disruptions continued spreading beyond the strait.
Beyond crude oil, 30% of global fertilizer trade passes through the Strait of Hormuz, threatening food production in import-dependent nations already struggling with rising commodity prices.
Iran’s oil revenues had been substantial heading into the blockade, with Chinese purchases alone accounting for 45% of Iran’s government budget, making the interdiction a direct strike at Tehran’s financial lifeline and raising the stakes for both sides to hold their positions.
Why Diesel and Jet Fuel Face the Worst of the Shortage
Not all fuels are hurting equally. Diesel and jet fuel are taking the hardest hit, and there are specific reasons why. Both fuels come from a special refining process that not every refinery can do well. Most refineries focus on making gasoline instead. Think of it like a restaurant that mostly serves burgers suddenly needing to make sushi.
Meanwhile, distillate inventories — which include diesel, jet fuel, and heating oil — sit at their lowest levels since 2008. Demand keeps climbing while supply keeps shrinking. That painful combination explains why these two fuels are feeling the squeeze most. Global jet fuel consumption has already reached 7.788 million barrels per day in 2025, with demand projected to climb even higher in 2026.
Diesel alone powers 90% of product transport across the United States, meaning any disruption to its supply sends shockwaves through virtually every corner of the economy. Central bank decisions on interest rates can amplify these effects by influencing transportation and fuel costs through monetary policy.
Why Strategic Reserves Can’t Cover a 10–15% Supply Gap
Knowing which fuels are hurting most is one thing, but figuring out what to do about it is another. Governments have strategic reserves, but those can’t plug a 10–15% supply gap. Think of reserves like a backup battery — useful for short outages but not meant to run the whole house forever. The IEA coordinated a 400-million-barrel global release and it barely moved the needle.
Australia holds only 30 days of diesel and jet fuel. US reserves are strained on refined products. Until the Strait of Hormuz reopens, no amount of reserve releases truly fixes the problem. The strait carries approximately 20 million barrels per day of oil and refined products, representing roughly one-fifth of global supply, with only about 5 million b/d reroutable via alternative pipelines.
China’s strategic petroleum reserve, spread across underground caverns and coastal tank farms, holds an estimated 130 million barrels of underground capacity alone, yet even that volume is assessed as sufficient to sustain major combat operations for only a matter of months before distribution bottlenecks — not raw inventory — become the binding constraint. Central bank policy rates and higher borrowing costs can deepen economic effects from prolonged fuel shortages, reducing demand but also raising costs for transportation and storage.
Why Diesel and Jet Fuel Recovery Will Take Months, Not Weeks
Even with the Strait of Hormuz reopened, diesel and jet fuel supplies won’t bounce back quickly. Think of it like restarting a frozen computer — it doesn’t just snap back instantly.
Middle East refineries need time to restart operations and reach full production again. IATA estimates recovery will take several months. That’s because the problem isn’t just blocked shipping routes. The refineries themselves were disrupted. Tariff impacts on imported refinery equipment and parts have also raised costs and can slow repair and ramp-up timelines.
Crude oil might flow again fairly fast but turning crude into usable jet fuel and diesel takes working refineries running at full capacity. Restarting that entire process simply cannot happen overnight. Jet fuel prices have more than doubled since the war with Iran began, adding enormous financial pressure on airlines already struggling to manage costs.
Asian markets are feeling the sharpest pain, with jet fuel prices reaching up to $228 per barrel. Airlines operating across the region face steeper costs than carriers in other parts of the world, widening the financial gap between regional operators as the crisis drags on.
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