The International Energy Agency has warned that the global crude oil market could enter a “red zone” as early as July or August due to tightening supplies, falling reserves, and rising summer fuel demand.
IEA Executive Director Fatih Birol said on Thursday that although the world had a surplus supply when the Iran war started, global reserves are now steadily declining.
Speaking at Chatham House in London, Birol said the market was facing mounting pressure because of reduced oil exports from West Asia and the ongoing disruption linked to the Strait of Hormuz.
According to the IEA, around 18 million barrels per day of crude oil and refined products remain affected by the effective closure of the Strait of Hormuz, a key global energy shipping route.
The agency previously coordinated the release of 400 million barrels of oil from strategic reserves in March to stabilise markets. Birol described it as the largest coordinated release in IEA history.
He said the oil is currently entering markets at a rate of between 2.5 million and 3 million barrels per day and added that the agency was prepared to organise further releases if required.
The IEA said member countries collectively hold emergency reserves exceeding 1.2 billion barrels, along with another 600 million barrels in industry stocks held under government obligations.
The agency said the current supply disruption has pushed Brent crude prices above $100 per barrel and sharply reduced commercial stockpiles worldwide.
The IEA, established in 1974, has coordinated emergency oil stock releases six times previously, including during crises in 1991, 2005, 2011, and twice in 2022.