Oil: IEA talks about "red zone" between July and August due to war

The executive director of the IEA (International Energy Agency), Fatih Birol, warned this Thursday (21) that the global oil market could enter a "red zone" between July and August, given the combination of the seasonal peak in demand in the summer of the Northern Hemisphere, the interruption of exports from the Middle East and the reduction in global stocks.

During an event at Chatham House, in London, Birol stated that "we could be entering the red zone in July or August if there is no improvement in the situation", in reference to the energy crisis caused by the war involving Iran and the effective closure of the Strait of Hormuz.

According to the director, more than 14 million barrels per day (bpd) of oil supply were withdrawn from the market in the Middle East, creating "the biggest energy crisis in history".

The leader highlighted that the global oil surplus before the war, the coordinated release of 400 million barrels from the IEA's strategic reserves and the use of commercial stocks helped to cushion the initial shock, but "are not a solution to the problem".

"The most important solution is the full and unconditional reopening of the Strait of Hormuz," he said.

Birol explained that the agency currently releases between 2.5 million and 3 million barrels per day to the market, in the largest coordinated use of reserves in history, but warned that stocks are running out just as the season of greatest fuel consumption begins.

"Inventories are decreasing, new oil is not arriving from the Middle East and demand is increasing," he said.

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The IEA director also warned that the recovery of production and refining capacity in the Middle East will be slow and uneven.

According to Birol, countries like Saudi Arabia and the United Arab Emirates have the financial and technological resources to accelerate the recovery, but Iraq is a cause for greater concern.

"My biggest fear is Iraq," he said, citing the heavy dependence on oil revenues and the lack of storage capacity, which has forced the closure of oil fields that are difficult to reactivate.

Source: CNN