The International Energy Agency said Tuesday oil markets continue to benefit from several buffers, but the agency's head warned there was "no room for complacency" as the conflict in the Middle East continues to threaten global energy security.
“The escalation in hostilities affecting the Strait of Hormuz and energy infrastructure in the region increases security of supply concerns and uncertainty over the market outlook,” Fatih Birol said in a statement.
“Threats to the Bab el-Mandeb Strait, which has become increasingly important as a route to bypass the Strait of Hormuz, exacerbate these concerns further,” he added.
For now, oil markets are being supported by several factors, Birol said.
Saudi Arabia and the United Arab Emirates continue to move substantial volumes of crude through alternative export routes, while some shipments are still passing through the Strait of Hormuz, he said. Higher exports from the US, Brazil, Venezuela and Kazakhstan, coupled with weaker crude demand from China, have also helped cushion the impact of supply disruptions.
Birol said emergency oil releases by IEA member countries have provided further support. Since the agency announced a coordinated action on March 11 to make 400 million barrels available, about 290 million barrels have already been released, with additional volumes still reaching the market.
“There is no room for complacency on oil security amid the escalation in hostilities and a continued drawdown of available commercial inventories,” he said. “Refinery activity and product supplies have not picked up as much as crude deliveries, meaning that markets for refined oil products, including diesel and gasoline, are considerably tighter than those for crude.”
On natural gas, Birol said additional LNG exports from the US and Canada have replaced about 70% of the supplies lost through the Strait of Hormuz.
“But further delays in resuming Gulf exports risk keeping markets tighter for longer,” he warned.
"This will be felt by all LNG importers, including Europe as it looks to refill its gas storage for next winter," he added.
By Handan Kazanci
Anadolu Agency
energy@aa.com.tr
