The world still has buffers against an oil shock, but the squeeze is moving closer to consumers as fuel and gas markets tighten, the International Energy Agency said Tuesday.
In a statement on oil markets, IEA Executive Director Fatih Birol said the agency was tracking the impact of the Middle East conflict after hostilities affected the Strait of Hormuz and energy infrastructure in the region. Threats to the Bab el-Mandeb Strait, now a key bypass route for Hormuz traffic, have added another risk point for global supply.
The IEA said crude markets continue to receive support from Gulf exports moving through alternative routes, especially from Saudi Arabia and the United Arab Emirates, as well as volumes still passing through Hormuz. Gulf exports are below late-June highs, the agency said, but remain well above levels seen from early March to mid-June.
Other producers have helped fill part of the gap. The IEA said the United States, Brazil, Venezuela and Kazakhstan have raised exports, while China has cut crude oil imports by nearly 50% compared with pre-war levels, helping calm demand pressure.
Emergency stock releases are also still feeding the market. Since the IEA announced a collective action on March 11 to make 400 million barrels available, member countries have released about 290 million barrels. They still hold more than 1 billion barrels of government-controlled emergency stocks, the agency said.
But not every part of the market is getting relief at the same speed. “There is no room for complacency on oil security amid the escalation in hostilities and a continued drawdown of available commercial inventories,” Birol said.
The IEA said refinery activity and product supplies have not recovered as much as crude deliveries, leaving diesel and gasoline markets tighter than crude. In LNG, extra flows led by the United States and Canada have offset about 70% of lost Hormuz-linked supply, but delays in restoring Gulf exports could keep markets tighter for importers, including Europe as it refills storage for winter.
The development adds pressure on governments trying to shield households from higher fuel costs while keeping industry supplied. Markets are watching whether Hormuz can fully reopen, with the IEA saying that a “full and unconditional reopening” is needed to prevent further damage to global energy security.
