In March, IEA countries collectively decided to place more than 400 million barrels of oil from their strategic reserves on the market.
The executive director of the International Energy Agency (IEA), Fatih Birol, warned this Monday that the ‘cushion’ of commercial oil reserves accumulated before the war in the Middle East and the closure of Hormuz will be exhausted in a matter of weeks.
The reserves “are running out very quickly”, warned Birol in statements to the press during the first day of the G7 finance ministers’ meeting in Paris, which ends on Tuesday.
Asked whether it was weeks or months, he responded that “there are still several weeks left, but we must be aware that it is decreasing rapidly.”
In the latest monthly report on the oil market, published last week, the IEA pointed out that the closure of the Strait of Hormuz deprived the market of more than 1,000 million barrels from the Persian Gulf countries, which means that more than 14 million barrels per day were trapped without being able to exit.
And although Saudi Arabia and the United Arab Emirates are managing to export part of their production through other routes (basically pipelines that bypass the Strait of Hormuz) and other producing countries in other regions of the world have increased their oil extraction, world reserves between March and April were reduced by 250 million barrels, that is, at a rate of 4 million barrels per day.
Birol recalled that, before the outbreak of war in the Middle East, the market situation was one of excess oil, around 2.5 million barrels per day above demand.
But he warned that these margins “are not infinite and commercial reserves are decreasing rapidly”.
Furthermore, he highlighted that, with summer, the travel and cultivation season is beginning in the northern hemisphere, in which more fuel is consumed and also more fertilizers.
All these elements – he commented – contribute to raising prices and this could have “important repercussions” on food prices, which could “significantly drive” inflation upwards.
In March, the IEA countries collectively decided to place more than 400 million barrels of oil from their strategic reserves on the market to calm market tensions and avoid speculative movements.
A measure of this type could be repeated if the Strait of Hormuz remains closed, as French Finance Minister Roland Lescure said today: “If it is necessary to do it again in the coming months, we will do it”, he assured upon arriving at the G7 meeting.
In last week’s report, the IEA estimated that the crisis triggered by the closure of Hormuz and the accompanying price rise will result in a decrease in global oil demand this year of 420,000 barrels a day, which contrasts with the 1.3 million barrels a day increase in forecasts that had been made before the war began.
