Paris [France], May 13 : The global energy landscape is facing a seismic shift as “rapidly shrinking buffers amid continued disruptions may herald future price spikes ahead,” the International Energy Agency (IEA) cautioned on Wednesday.
With the strategic Strait of Hormuz effectively choked for over 10 weeks, the Paris-based watchdog warned that world oil inventories are being exhausted at an “unprecedented” and “record” pace.
The crisis stems from the prolonged closure of the world’s most vital maritime artery, which has crippled the movement of Gulf crude and gas. According to the IEA, the persistent instability could cause global oil supply to “fall by 3.9 million barrels per day (bpd) through 2026.”
Although a “deteriorating economic environment” is expected to dampen consumption, the agency noted that the drop in demand will not be enough to bridge the massive supply gap.
To combat the supply shock triggered by escalating military tensions involving the United States, Israel, and Iran, nations have aggressively tapped into “commercial stockpiles and strategic petroleum reserves.”
The report revealed a staggering “record” depletion, with global stocks plummeting by 117 million barrels in April alone, following a 129-million-barrel drain in March.
In a coordinated effort to stabilise the volatile market, the IEA has moved forward with “plans to release 400 million barrels from emergency reserves held by member states.”
While approximately 164 million barrels have already reached the market, the agency admits the situation remains fragile as “higher prices, a deteriorating economic environment and demand-saving measures will further weigh on global oil consumption.”
The “effective closure” of the Hormuz route has now pushed the global energy sector to a breaking point, just as the peak summer travel season begins.
With airlines already sounding the alarm over potential “jet fuel shortages within weeks,” the IEA warned that the longer the bottleneck persists, the higher the likelihood of “volatility spreading across global energy and financial markets.” (ANI)