The war in the Middle East has triggered the largest oil supply disruption in the history of global energy markets, prompting a record emergency release of strategic stocks by member countries of the International Energy Agency (IEA), the agency’s Director Fatih Birol said on Monday.
In a video statement on the latest developments regarding the IEA's emergency oil stock release and the next steps, Birol said that the war in the Middle East is creating "the largest supply disruption in the history of the global oil market."
"The volume of oil supply now offline is already higher than the supply loss during the oil shock of 1973 and higher than any of the big disruptions we have witnessed since then," Birol stressed.
According to Birol, the disruption is also creating significant challenges in global natural gas markets while posing broader risks for energy security, affordability and the global economy.
“While our focus is on energy markets, this situation is about more than energy,” he said, expressing condolences to those affected by the conflict and the loss of life in the region.
In response to the supply shock, IEA member countries unanimously agreed on March 11 to launch the largest coordinated release of emergency oil stocks in the agency’s history.
The collective action will make around 400 million barrels of oil available to the market to offset supply losses linked to the disruption of shipments through the Strait of Hormuz.
Birol said the rapid response had helped calm markets.
“This quick action by the IEA had a calming impact on markets. Oil prices today are significantly lower than they were one week ago,” he said.
However, he warned that the stock release can provide a buffer for now but it is not a lasting solution.
“The single most important thing for a return to stable flows of oil and gas is the resumption of transit through the Strait of Hormuz,” he said.
- Asia hardest hit by supply shock
The disruption is already affecting economies and consumers worldwide, with energy-importing countries in Asia feeling the most immediate impact.
Birol said emerging and developing economies in South and Southeast Asia are facing supply shortages and sharp price spikes, prompting emergency measures in some countries.
Major producers are also suffering from the disruption. Countries such as Iraq are being deprived of a large portion of their fiscal revenues due to halted exports, he added.
- Oil flowing to market
Birol said additional barrels from emergency reserves are already reaching markets, particularly in Asia.
Countries in the Asia-Pacific region have committed to release well over 100 million barrels, while European countries are contributing a similar volume. Nations in the Americas are releasing more than 170 million barrels, with additional supply of over 20 million barrels expected from increased production.
Despite the massive release, Birol said IEA countries still retain significant emergency reserves.
Once the current action is completed, government and industry stocks held under emergency obligations will decline by only about 20%, leaving more than 1.4 billion barrels available if further action becomes necessary.
- Support beyond IEA members
Birol also welcomed support from several non-member countries cooperating with the agency, including India, Colombia, Singapore, Thailand and Vietnam.
Even if shipping through the Strait of Hormuz were to resume soon, Birol warned that the global energy trade would take time to recover.
“With the security situation in the Middle East still very much in flux, the IEA will continue to work closely with governments around the world to discuss options for responding to the disruptions we are seeing,” he said.
The agency is also reviewing potential recommendations on the demand side to further support energy security if the disruption continues.
Founded more than 50 years ago, the IEA’s core mission remains safeguarding global energy security, Birol added.
By Ebru Sengul Cevrioglu
Anadolu Agency
energy@aa.com.tr