Fatih Birol, head of the International Energy Agency, said on Monday that commercial oil inventories were depleting rapidly with only a few weeks worth left due to the Iran war and the closure of the Strait of Hormuz to shipping.
Birol, who is participating in the Group of Seven finance leaders meeting in Paris, told reporters that the release of strategic oil reserves had added 2.5 million barrels of oil per day to the market, but said these reserves “are not endless”.
The onset of the spring planting and summer travel seasons in the northern hemisphere will drain inventories more quickly as demand for diesel, fertilizer, jet fuel and gasoline increases, Birol added.
Asked about his comments in the G7 meeting, he said he described “a perception gap in the markets between the physical markets and the financial markets” for oil.
Birol said that before the U.S. and Israel launched attacks on Iran at the end of February, there was a major surplus in the oil markets, and commercial inventories were very high. But the situation has rapidly shifted due to the war.
He said commercial inventories would last “several weeks, but we should be aware of the fact that it is declining rapidly”.
Last week, the IEA said global oil supply will fall short of total demand this year as the Iran conflict wreaks havoc on Middle East oil production, and inventories were being drained at an unprecedented pace. The IEA had previously forecast a surplus this year.
Global observed oil inventories fell at a record pace in March and April, dropping by 246 million barrels, the IEA said in its latest monthly oil market report.
The 32-member IEA coordinated the largest-ever release of stocks from strategic reserves in March, agreeing to withdraw 400 million barrels in a bid to calm markets.
Around 164 million barrels had been released by May 8, it said.
Overall global oil supply will fall by around 3.9 million barrels per day across 2026 due to the war, the agency said, slashing its previous forecast, which had projected a 1.5 million bpd drop.
(Reporting by Leigh Thomas, David Lawder and Dominique Vidalon in Paris and Robert Harvey in London; Editing by Sudip Kar-Gupta and Emelia Sithole-Matarise)