Oil market risks 'red zone' by summer, IEA chief warns

Read a summary of this article on FAST.
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST Tap here to return to FAST
FAST

LONDON: The world oil market risks entering a "red zone" by the upcoming summer season should there be no progress on ending the Middle East war, the head of the International Energy Agency warned on Thursday (May 21).

"We may be entering the red zone (on supplies) in July or August if we don't see that there are some improvements in the (war) situation," Fatih Birol said at the Chatham House think tank in London.

Iran has effectively halted tanker traffic through the Strait of Hormuz in retaliation for US and Israeli strikes launched in late February, choking off oil and gas traffic and sending prices soaring.

While a surplus of oil in the market before the war has helped absorb the energy shock, "stocks are eroding", Birol said.

He warned that it will take "a lot of time" for production and refining capacity to return to pre-war levels.

Birol previously said that commercial oil stocks are falling "very fast", even with the release of strategic reserves by governments worldwide.

The IEA has coordinated the release of 426 million barrels from emergency stocks by its 32 member countries, and said this month that around 164 million barrels have already been drawn.

A ceasefire on Apr 8 halted the war, but negotiation efforts have so far failed to yield a lasting peace agreement, weighing on the world economy.

Sign up for our newsletters

Get our pick of top stories and thought-provoking articles in your inbox

Subscribe here

Get the CNA app

Stay updated with notifications for breaking news and our best stories

Download here

Get WhatsApp alerts

Join our channel for the top reads for the day on your preferred chat app

Join here