If the Strait of Hormuz fails to reopen and there are no new oil supplies from the Middle East, the ongoing decline in global inventories combined with a surge in demand over the holiday season means oil markets could enter the “red zone” in July or August, International Energy Agency (IEA) Executive Director Fatih Birol said.
Birol did not specify what exactly the “red zone” would look like. But he said the oil market surplus before the war with Iran, the coordinated release by the International Energy Agency of 400 million barrels of strategic reserves and the reduction in commercial stocks would not be enough to resolve the crisis.
“The most important solution is the full and unconditional opening of the Strait of Hormuz,” Birol said.
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Oil market. We will see the problems in July
The IEA has previously concluded that the global market is facing the most severe disruption in its history. This is despite, Birol said, the fact that the market took advantage of the “lucky” situation, entering the crisis with a surplus that helped it absorb the shock. However, Birol added, these shares are currently losing value.
Under normal conditions, approximately 20% of the world flows through the Strait of Hormuz. world demand for crude oil and liquefied natural gas, but shipping traffic has virtually ceased since the February 28 launch of attacks on Iran by the US and Israel.
Energy crisis
The head of the International Energy Agency said that “the greatest losses from this crisis will be felt by developing countries in Asia and Africa,” adding that he is equally concerned about the impact of the war with Iran on global food security and energy security.
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Birol warned that it would likely take a “long time” for Middle East oil production and refining to return to pre-war levels, saying the International Energy Agency was “ready to act” to coordinate further releases of strategic oil reserves if needed.
In March, the IEA coordinated the release of 400 million barrels of oil from strategic reserves to address supply disruptions caused by the war with Iran. It was the largest action of this type in the history of the organization.
