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By Jean-Marc Natal and Azim Sadikov
WASHINGTON DC, Jul 17 2026 (IPS)

The largest disruption to the global oil market in decades should have sent prices soaring. But after spiking at the start of the war in the Middle East, crude prices soon settled in a range of $90 to $100 per barrel, much lower than many had feared. Why didn’t prices climb higher? The answer is that a combination of factors helped cushion the initial blow. But much of that room has now been used up.

There are plenty of reasons why oil should have become cripplingly expensive. The war effectively closed the Strait of Hormuz, cutting off some 20 million barrels a day of crude oil and refined products, a fifth of global consumption. Gulf producers redirected what they could. Saudi Arabia sent oil through its pipeline to the Red Sea port of Yanbu. The United Arab Emirates pushed its Fujairah port, outside the strait, close to capacity. Even so, these workarounds offset only a fraction of lost Hormuz volumes.

Beyond crude, refined product output in the gulf region dropped significantly, hitting diesel and jet fuel hardest—products in which the region accounts for about 10 percent of global supply.

By the end of May, more than 1.1 billion barrels of crude—equivalent to about 10 days of typical global consumption—had not reached the market. At the same stage of the disruption, the shortfall exceeded those of the 1973 oil shock, the Iran-Iraq war, and the Gulf War.

Three shock absorbers

How did the global system absorb a disruption of this scale? In the days before the war, supply was running about 2 million barrels a day above demand, providing a head start. In the March-May period, three factors helped close the gap:

• Demand compression did the heavy lifting, especially in Asia, as higher prices reduced consumption and economies turned to alternatives such as coal and renewables. Transportation demand proved stickier though, in part because of fuel price caps, subsidies, and tax rebates that contained the impact—but at a fiscal cost.
• Production outside the Gulf rose more than expected, by nearly 2 million barrels a day above 2025 levels. The United States led the way, with Venezuela, Guyana, and Russia also raising production.
• Inventories did the rest. The estimated market deficit of about 4.0 million barrels a day in March–May was met almost entirely by drawing down global stocks, including commercial inventories in China and strategic reserves.

Recovery won’t be instant

Before the most recent escalation of tensions, the US-Iran framework agreement to reopen the strait sent prices sharply lower, in large part because stranded oil on tankers in the Gulf could rapidly return to the market. Still, much remains uncertain—including when freedom of navigation through the world’s most critical oil chokepoint will be effectively restored, and how quickly shipping, insurance, and operator confidence will follow.

Industry estimates suggest it will take two to three months before a significant share of oil flows can resume following a full reopening of the waterway. A longer-term concern is that prolonged production halts could cause permanent output losses, especially where financing to restart wells is scarce.

Whenever supply begins to recover, the oil deficit will close only gradually, drawing inventories closer to operational minimums—the level below which the physical system itself begins to bind.

Lessons for policymakers

Energy shocks still bite. What cushioned the initial blow this time is that energy markets had room to maneuver and absorb it. As tensions flare again in the Strait of Hormuz, that room is now smaller and shrinking further as spare capacity has been deployed, demand has compressed, and inventories have been drawn down. Unless inventories are replenished, the world will start from a weaker position when the next shock comes.

For policymakers, three lessons stand out:

• Inventories matter. Rebuilding them is essential to prepare for future shocks.
• A single chokepoint leaves the global economy heavily exposed. Diversifying energy sources—including renewables—is as important as diversifying routes.
• Support to consumers should be targeted to the most vulnerable and temporary to protect government budgets and the price signals that encourage energy saving and efficiency.

Energy markets’ flexibility and prompt policy actions bought the global economy time. An enduring US-Iran agreement would create an opening to restore supply. But significant efforts are still critically needed to increase the resilience and diversification of energy supply and prevent oil shocks from destabilizing the global economy.

IPS UN Bureau

 

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By CIVICUS
Jul 17 2026 (IPS)

 
CIVICUS discusses the prospects for elections in Serbia with Rasa Nedeljkov, Programme Director at the Center for Research, Transparency and Accountability, a civil society organisation that monitors electoral processes and the rule of law in Serbia.

Rasa Nedeljkov

Following mass protests demanding restoration of the rule of law, Serbian President Aleksandar Vučić announced on 27 June that he would resign within weeks and call early presidential and parliamentary elections. However, many in civil society are suspicious, with no date yet set for elections and the potential for Vučić to retain power by becoming prime minister. The ruling Serbian Progressive Party has moved to dismantle the conditions for fair competition. Civil society organisations that demand accountability and monitor elections face legal harassment, police raids and smear campaigns. Serbia’s path to European Union (EU) membership has stalled as its government deepens ties with China and Russia.

How has President Vučić responded to demands for elections?

Vučić committed to holding early elections in 2026 under pressure from over a year of mass protests. His announcement came with no date for dissolving parliament or his resignation, amid speculation that he could return as prime minister.

Vučić has deliberately dragged his feet because he wants to ensure that when they happen, his party cannot lose. Meanwhile, the government has systematically worsened conditions for elections. Independent media are being suffocated. University professors who supported student protests are being fired. Justice officials who show independence are being replaced by more obedient ones. Hate campaigns against civil society, journalists, opposition parties and students are intensifying. The plan has been transparent: call elections only once the environment is so controlled that they cannot bring real change.

This strategy reveals the fundamental collapse of democratic standards in Serbia. Democracy requires genuine competition, and competition is genuine only when the government can lose. Vučić is building the opposite, putting in place a system where elections are empty rituals that rubber-stamp predetermined outcomes. Every month of delay has bought time to consolidate control and eliminate remaining spaces for independent voices.

What are the challenges with elections in Serbia?

Elections are being voided of substance through the systematic disregard, misuse and selective enforcement of laws and rules, all with the goal of turning elections into empty rituals.

We are witnessing harsher voter intimidation, more elaborate political clientelism, more brazen abuse of public resources and increasingly overt violence on election day. Our observers have been physically attacked, with police looking on.

Elections are still held, but the quality of the process is severely damaged. Electoral corruption takes countless forms, including interference in elections by organised crime and capture of institutions. And it’s protected by impunity. The state apparatus refuses to prosecute it.

Serbia is becoming an electoral autocracy. Unlike democracies, where governments lose elections, in electoral autocracies only opposition parties can lose.

How is the government attacking civil society?

Fourteen months ago, police raided our office and remained on-site for 28 hours, copying almost 10,000 pages of financial documents. This was turned into a spectacle for state-controlled media, which branded us a ‘criminal gang of foreign mercenaries money-laundering millions of dollars’. Three other civil society organisations in Belgrade were raided on the same day. We still haven’t heard from the prosecutor’s office, and we are certain our papers were perfectly clean.

Yet the assault continues through narrative and threat. Senior ruling party officials and pro-government media regularly label us as behind-the-scenes organisers of a ‘colour revolution against Serbia’. We live in constant uncertainty, never knowing if another raid or something worse is coming. The strategy is clear: to exhaust civil society financially and psychologically and make donors and partners fear any association with us. It’s institutional intimidation dressed in the language of law enforcement.

Can protests bring lasting institutional change?

The protests are the best thing that has happened to Serbia in a long time. Sparked by the collapse of a railway station canopy in Novi Sad in November 2024, which killed 16 people, they began as a student-led demand for accountability and grew into a nationwide movement. Our society had sunk into political apathy, a feeling that there was no alternative, not even a slight possibility of change. The endurance of Serbian people in demanding the restoration of the rule of law, in the face of growing repression and toxic propaganda, has been remarkable. Society has been evolving politically, showing more solidarity and resilience. People have begun to imagine that change is possible.

At the same time, the protests have made painfully visible how deep state capture runs, and how far Serbia is from having accountable institutions. How do you translate months of mobilisation into lasting change? Nobody has a complete answer. When we get there, the transition will be complex and exhausting. We should closely watch neighbouring Hungary. Viktor Orbán’s and Vučić’s styles of authoritarian, grand-corruption-driven rule are very much alike. However, Hungary is an EU member, which may make a big difference.

We believe it’s important that this period, rather than the moment elections are officially called, be used for preparation, including by recruiting and training people to serve as election observers and members of polling boards, and building the logistics needed to cover polling stations nationwide. The goal has to be readiness, so whenever elections are called, the infrastructure of oversight is already in place.

What’s the role of the EU in Serbia’s democratic future?

Serbia needs more international support and pressure, and the EU is the most crucial lever. Neighbouring countries are making progress towards EU membership. Serbia is stuck. Without the EU perspective, all potential outcomes for Serbia look murky.

Our current government is far closer to China and Russia than to Europe, as its propaganda and rhetoric make abundantly clear. It wants only the financial benefits of EU membership, not the accountability that comes with it. It wants EU money without EU standards. That’s not a sustainable position, but without stronger international pressure, it may be the path Serbia remains on.

CIVICUS interviews a wide range of civil society activists, experts and leaders to gather diverse perspectives on civil society action and current issues for publication on its CIVICUS Lens platform. The views expressed in interviews are the interviewees’ and do not necessarily reflect those of CIVICUS. Publication does not imply endorsement of interviewees or the organisations they represent.

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SEE ALSO
Serbia: ‘Social media are more trustworthy than much of official media, a disturbing sign of state capture’ CIVICUS Lens | Interview with Marija Babić 29.Jun.2026
Serbia: ‘We haven’t inherited democracy, so we’ve had to reinvent it ourselves’ CIVICUS Lens | Interview with Mihajlo Matković 06.Dec.2025
Serbia’s suspicious election CIVICUS Lens 26.Jan.2024

 

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