IEA Warns of Energy Security Risks Amid Middle East Tensions

International Energy Agency (IEA) Executive Director Fatih Birol stated on Tuesday that although global oil markets are benefiting from several balancing factors, recent developments in the Middle East have heightened concerns about energy supply security and added uncertainty to the market outlook.

In a statement, Birol outlined a number of factors capable of easing pressure on global oil markets. Producers in the Gulf region have maintained substantial supplies, with Saudi Arabia and the United Arab Emirates making significant efforts to keep oil flowing to global markets via alternative routes outside the Strait of Hormuz.

According to IEA estimates, oil exports from the Gulf region, whilst below their late June peak, remain significantly higher than levels recorded between early March and mid-June. Meanwhile, increased crude oil exports from the United States, Brazil, Venezuela, and Kazakhstan have helped offset some of the supply shortfall from the Gulf region.

The sustained release of strategic petroleum reserves by IEA member countries has also helped to ease market pressures. Since 11 March, member countries have released approximately 290 million barrels of oil onto the market. They still hold substantial emergency reserves, including more than one billion barrels under government control.

However, the IEA warned that risks to oil supply security should not be underestimated amid rising tensions and declining commercial inventories. Refining activity and product supply are recovering more slowly than crude oil supply, making markets for refined products such as diesel and petrol considerably tighter than the crude oil market.

In the natural gas market, increased supply of liquefied natural gas (LNG) from the US, Canada, and other producers has offset approximately 70 per cent of the supply shortfall through the Strait of Hormuz. Nevertheless, further delays in the recovery of exports from the Gulf region could prolong tight market conditions and impact all LNG importing countries, including Europe, which is currently replenishing gas reserves ahead of the coming winter. The IEA called for a resolution to the ongoing conflict, including the full and unconditional reopening of the Strait of Hormuz, to prevent a worsening of global energy security.