Financial Wire

IEA Chief Flags 13 Million b/d Oil Disruption Amid Middle East Conflict

-- International Energy Agency executive director Fatih Birol said Monday that global oil supply disruptions have reached about 13 million barrels per day due to the Middle East conflict and called it the largest threat to energy security ever recorded.

Birol delivered the remarks during an event organized by the Atlantic Council.

Current oil and gas disruptions now exceed past crises, including the 75 billion cubic meters of gas lost after Russia's invasion of Ukraine, Birol said.

Birol warned that damage to energy infrastructure is deepening the crisis, adding that even if the situation improves quickly, restoring disrupted supply systems would take considerable time, he said.

Over 80 energy facilities, including oil fields, gas sites and refineries, have been damaged, Birol said, adding that "more than one-third are... very severely damaged," highlighting the scale of disruption.

He added recovery will vary by country, noting it may take longer in nations with weaker financial capacity, and said a return to pre-crisis levels could take "up to two years," underscoring prolonged supply risks.

Birol said he hopes additional emergency releases will not be required, adding, "I very much hope we don't need to do it, but if it is needed, we are ready to act immediately."

The IEA had earlier announced on Mar. 11 that its 32 member countries unanimously agreed to release 400 million barrels from emergency reserves to ease oil market disruptions linked to the Middle East conflict.

He added that the IEA is closely monitoring the situation and stands ready to deploy further stockpiles if needed to help stabilize global oil markets.

The IEA chief said that prices are "... already high but they are not reflecting the severity of the problem," and warned that markets could adjust sharply as conditions become clearer.

Prices remain misaligned with fundamentals, terming the current situation as a "disconnect," according to Birol.

"... I think soon we will see that they [prices] will converge, which is of course an extremely sensitive issue for the global economy," he said.

The crisis extends beyond energy, with "vital commodities... such as fertilizers, petrochemicals, helium" also being lost daily, Birol said, highlighting risks to global supply chains.

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IEA Chief Flags 13 Million b/d Oil Disruption Amid Middle East Conflict | Financial Wire