Middle East conflict cut 12 million b/d of oil supply – IEA chief

The Middle East war has disrupted around 12 million b/d of global oil supply, with the impact expected to worsen in April, according to the International Energy Agency’s (IEA) chief Fatih Birol.

IMAGE: Oil storage tanks. Getty Images

The oil supply crunch is expected to intensify over the coming months, with prices rising sharply since the beginning of the war, IEA’s chief said.

The supply shortage will soon impact European crude oil supply, Birol said, speaking at a podcast hosted by Norges Bank Investment Management chief executive Nicolai Tangen.

He noted that some oil cargoes had already transited the the Strait of Hormuz in March, before the conflict expanded. “They [the cargoes] are still coming to ports, still bringing oil and energy,” he said.

However, the condition in April will be “much worse than March,” Birol said. “In April, there is nothing. The loss of oil in April will be twice the loss of oil in March,” he added.

With no chances of a swift de-escalation in sight, the crisis has already created a much deeper supply disruption than those seen in previous global crises like Russia’s full-scale invasion of Ukraine in 2022.

In March, the IEA’s 32 member countries agreed to release about 400 million bbls of crude oil to offset some supply disruption. Birol also said the IEA may consider another round of emergency oil stock release from its strategic reserves, as the conflict in the Middle East expands.

“We are assessing the market on a daily, if not hourly, basis, 24/7. If we think there is a need, we may well make a suggestion [to release more oil],” Birol said.

Brent crude’s price has gained sharply since the beginning of the US-Israel joint military operation against Iran – leading to the effective closure of the Strait of Hormuz, a key conduit for global oil flows.

The stock release is expected to put some downward pressure on oil prices, but “will not be a cure,” Birol said. “The cure is opening up the Strait of Hormuz,” he added.

By Aparupa Mazumder

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