International Energy Agency warns oil stocks down to few weeks amid Iran conflict

Head of the International Energy Agency Fatih Birol stated on May 18 that commercial oil inventories are being depleted rapidly and now amount to only a few weeks of supply amid the impact of the war involving Iran and disruptions linked to the Strait of Hormuz.

Birol, who is attending the Group of Seven finance ministers’ meeting in Paris, said the release of strategic oil reserves had added around 2.5 million barrels per day to global supply, Caliber.Az reports, citing Reuters.

However, he warned that these stocks were “not endless”.

He added that the onset of the spring planting season and summer travel demand in the northern hemisphere would accelerate the drawdown of inventories, as consumption of diesel, fertiliser, jet fuel and petrol rises.

Responding to questions at the G7 meeting, Birol made it clear that there was a “perception gap in the markets between the physical markets and the financial markets” for oil.

He noted that before the US and Israeli strikes on Iran at the end of February, global oil markets had been in surplus with relatively high commercial inventories. However, he stressed that the situation had shifted rapidly following the outbreak of hostilities.

Birol emphasised that commercial stocks would last “several weeks”, but cautioned that they were declining quickly.

The IEA previously said global oil supply is now expected to fall short of demand this year as the conflict disrupts Middle Eastern production and accelerates inventory drawdowns. This marks a reversal from earlier forecasts that had projected a surplus.

According to the agency, observed global oil inventories fell at a record pace in March and April, declining by 246 million barrels.

The IEA also said its 32 member countries coordinated the largest-ever release of strategic reserves in March, agreeing to release 400 million barrels to help stabilise markets, with around 164 million barrels already released by early May.

Overall, the agency now forecasts global oil supply could fall by around 3.9 million barrels per day in 2026 due to the conflict, revising sharply down from earlier projections of a smaller decline.

By Bakhtiyar Abbasov