Global Oil Reserves Drop at Record Pace, IEA Says

The International Energy Agency is warning of an unprecedented decline in global oil reserves, which fell by a record 246 million barrels across March and April 2026 amid regional conflict and strategic supply disruptions. The depletion, combined with Brent crude prices above US$120 per barrel, is intensifying fuel security risks for energy-dependent sectors such as aviation and cross-border logistics.

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The International Energy Agency (IEA) warned that global oil reserves are depleting at a record pace as conflict in the Middle East continues to disrupt supplies from the Persian Gulf. According to the agency’s monthly report, global reserves fell by 117 million barrels in April, following a 129 million barrel decline in March.

The depletion follows the start of a military offensive on Feb. 28. The IEA, which represents the interests of oil-consuming nations, said the rapid contraction of reserves may foreshadow further increases in crude oil prices. Global oil supply decreased by 1.8 million barrels per day (mbd) in April, bringing total output to 95.1 mbd. Since February, cumulative supply losses have reached 12.8 mbd.

The current supply crisis is being driven by a dual blockade. Iran has largely closed the Strait of Hormuz—a critical transit route for global oil and liquefied natural gas—in response to the February offensive. At the same time, the United States implemented a naval blockade on Iranian ports in mid-April to halt the country’s crude exports. These developments have pushed prices higher, forcing governments to draw on emergency stockpiles.

In response, the IEA announced it would release 400 million barrels from the strategic reserves of its 32 member countries. Approximately 164 million barrels have already been mobilized, and the agency expects the pace of these releases to accelerate in the coming months. Concerns remain elevated as the Northern Hemisphere summer approaches, with airlines warning of potential fuel shortages if the crisis persists.

Against this backdrop of global volatility, Brent crude has surpassed US$120 per barrel. In Mexico, Energy Minister Luz Elena González Escobar characterized the disruption as a historic shift in the global energy order. “The world’s energy order is changing; we may be witnessing the most important transformation since the 1970s,” González said.

SENER Makes Case for Fuel Subsidy Policy

The Mexican government has responded with an aggressive fuel price-containment strategy aimed at shielding domestic consumers from international price spikes. Without intervention, officials estimate gasoline prices in Mexico would have exceeded MX$30 per liter. Currently, the Ministry of Finance is using the IEPS (Special Tax on Production and Services) stimulus to absorb between MX$3 and MX$6 per liter in additional costs.

The policy places particular emphasis on diesel to prevent a surge in transportation costs, which would directly affect food prices and other essential consumer goods. The government reported spending approximately US$280 million per week on IEPS fuel subsidies during the peak of the price surge in April.

González attributed Mexico’s relative price stability to a strengthened National Refining System, which has reduced dependence on imported fuels. Data from the Mexican Institute for Competitiveness (IMCO) indicate that diesel production rose 69.9% year over year in 1Q26, reaching 285.7 mbd. Total refined petroleum product output increased 21.9% to 1.11 million barrels per day during the same period, supported by expanding operations at the Olmeca refinery.

While the IEA projects that global oil prices will remain elevated through at least the third quarter of 2026, the Mexican government maintains that its refining capacity provides a critical buffer. González acknowledged that the fiscal incentives require disciplined budgetary management but argued that protecting household purchasing power remains the administration’s priority. Analysts have noted that these deferred tax revenues represent a significant fiscal burden that may ultimately require budgetary adjustments.

Mexico Risks MX$220 Billion Loss if Hormuz Crisis Persists

According to the Mexican Institute of Finance Executives (IMEF), Mexico’s federal government faces  a potential revenue loss of more than MX$220 billion (US$12.7 billion) if the conflict in the Strait of Hormuz persists through 2026. The shortfall, driven by higher fuel subsidies under the IEPS, could push the fiscal deficit to approximately 5% of GDP—above the Ministry of Finance’s (SHCP) 4.1% target.

The projected loss represents roughly 50% of total IEPS revenue collected in 2025, or approximately 0.6% of GDP. IMEF National President Gabriela Gutiérrez said during an April 2026 press conference that federal fuel subsidies are currently averaging MX$5 billion (US$289.6 million) per week, based on an imported gasoline price of US$3.50 per gallon.

“If oil prices remain at US$100 per barrel, the price of imported gasoline would likely reach US$4 per gallon, increasing the weekly IEPS subsidy to MX$6 billion (US$347.6 million),” Gutiérrez said, adding that there are currently no clear indications of when crude oil and fertilizer flows through the Strait of Hormuz will stabilize.

The fiscal impact would escalate with the duration of the geopolitical crisis. A six-month disruption could result in a MX$156 billion revenue loss, while a year-long interruption could lead to the estimated MX$220 billion shortfall, further complicating the government’s fiscal consolidation efforts.