Global oil supply is “rapidly shrinking” as the war in Iran and the closure of the Strait of Hormuz drag into the third month, a report by the International Energy Agency says.
In April, global oil supply shrank by 1.8 million barrels a day, with the total losses since February amounting to 12.8 million barrels of oil lost every day, the IEA’s oil market report for May said.
The loss of supply from the closure of the Strait of Hormuz is “depleting global oil inventories at a record pace,” the report warned.
The uncertainty and “conflicting signals” over whether or not the United States and Iran will agree to a peace deal led to “wild swings” in benchmark oil prices in April, the report added.
“With Hormuz tanker traffic still restricted, cumulative supply losses from Gulf producers already exceed 1 billion barrels,” it said.
However, this has coincided with other producers, like Canada, the United States, Brazil, Kazakhstan, Venezuela and Russia, increasing crude oil exports, it added.
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The continued uncertainty has also hit oil demand, with Chinese, Japanese, Korean and Indian oil imports reducing sharply and “end users” also reducing their consumption of oil, the report says.
Higher jet fuel costs have also meant that people are flying a whole lot less, with aviation activity running “below normal level.”
If a deal between Iran and the United States were to be reached today, allowing the Strait of Hormuz to be opened for oil tanker traffic, the report predicts oil demand would swing back to growth by the third quarter — July, August and September — of this year.
However, the supply of oil “will likely be slower to recover.”
This will mean more price volatility, particularly ahead of the summer, when demand for energy is highest across the world.
The price of Brent crude, the global benchmark for the price of oil, was well above pre-war levels on Wednesday, around US$107 per barrel.
A report published in March warned that if the Iran war drags on till June, oil prices could breach US$200 a barrel. That would translate to a price of $US7 per gallon for consumers at the pump.
“If the Strait were to stay closed for an extended period, prices would need to move high enough to destroy an historically large amount of global oil demand,” the report added.
If war continues for three more months, “that would see talk quickly turn to global recession, as the world experiences a substantial market risk off.”
Call it “US-Israel War on Iran” not “Iran War”, this framing is showing your bias and lack of objective transparency.
@NF
So are ICE cars magically devoid of plastic components? When the options come down to something that needs some petroleum-derived products to get built and then also an unending supply of petroleum throughout its lifetime, and something that needs just the former, it’s a no-brainer which is better.
Most of the plastic components in a car will last its lifetime, unlike the gasoline that gets burnt once and then goes up in smoke. Which use of petroleum has makes more sense?
Oh the oil companies are making record profits and if drivers get dinged “who cares” But in a year or two (and beyond) they will be applying pressure to block more Chinese EV’s . I know I am ready to fight back and switch to a Chinese EV and why not an american EV. Well this rat has been on this treadmill, far too long and between the big oil and the big America car companies. I just tried of the same old same old and it gets worse each year.
Iran only supplies the world with 20-25% of world market, yet it is being reported on like they are the 75%.
This is a total scam simply to manipulate the markets and get those rich people that $200/barrel goal.
People are not seeing we are being corralled and pointed to a 2nd Great Depression
Love seeing people say “should just buy an EV” or “EVs recharge for eight bucks and change” but completely ignore everything it takes to build and charge EV’s.
You can’t build an EV car without petrochemicals. All the components, plastic, etc.. comes from those petrochemicals. Petrochemicals are made up of oil and gas. Plastic makes up 50% of a vehicles volume today.
Too bad Canada can’t be bothered to build a pipeline on the north side of superior all the way to Irving Refinery in NB. Apparently, Trudeau and Carney says there is no business case.
Why does global call this fiasco the “Iran” war? Everyone knows it’s Netanyahoo telling trump what he wants.
@Dee: You do know that big oil is investing heavily in wind turbine tech eh?
@Ben. Actually many have been built in BC and Alberta for that matter.
Wasn’t it Trudeau who said there was no “business case” to export O&G in Canada. Libs have been in power since 2015 so all delays are on them.
Yes, yes, let’s stop the petroleum industry and go back to living like they did in the middle ages.
The liberal journalists and their envro-weanies ( along with the FN crowd) continue to churn the most twisted view points.
Good…….maybe our emissions will finally start to drop
Good……..maybe emissions will finally start to come down
Maybe this could be avoided if we didn’t rely so heavily on Iran’s oil? There are plenty of global sources, including Canada’s own oil.
the sooner we all run out…. the better. looking forward to it :)
All part of the plan.
Conservatives think pipelines can be built in a day. When they were last in power, no pipelines were built or expanded.
@ Ti: Nope. You paying attention?
EVs recharge for eight bucks and change.
If that was true, wouldn’t it be smart then for Canada to go hard on getting pipelines built and the reserves going out to the world? Seems a simple solution to the world’s problems, I mean, that’s if the progressive liberal government actually cared about anyone else than themselves.
Just saying
EV time.