The closure of the Strait of Hormuz is causing a rapid depletion of commercial oil inventories, warns Fatih Birol, the chief of the International Energy Agency (IEA).
Birol made these comments at the Group of Seven finance leaders meeting in Paris on Monday. He revealed that strategic oil reserves have supplemented the market with 2.5 million barrels of oil per day. However, he warned that these reserves “are not endless,” reported Reuters.
He added that commercial inventories could last for several weeks, but warned that supplies are being “depleted rapidly.”
The upcoming spring planting and summer travel seasons in the northern hemisphere are likely to exacerbate the situation, increasing the demand for diesel, fertilizer, jet fuel, and gasoline.
Birol highlighted a “perception gap in the markets between the physical markets and the financial markets” for oil. He noted that the oil markets and inventories were in surplus before the U.S.-Iran war in late February. However, the war has drastically altered the situation.
Oil Crisis Deepens Amid Iran Conflict
The Iran conflict has disrupted Middle East oil production, pushing global oil supply below demand this year and reversing the IEA’s earlier surplus forecast. In response, the IEA coordinated a record release of 400 million barrels from strategic reserves in March, with about 164 million barrels released as of May 8.
In April, Birol had …
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