IEA: Oil Supply Shortfall Likely Until Year-End Due to Middle East Conflict

Even If the Strait of Hormuz Reopens in June,
Daily Supply Shortfall Expected to Reach 1.8 Million Barrels

The International Energy Agency (IEA) projected on May 13 (local time) that, due to the aftermath of the war in the Middle East, this year’s global crude oil supply will not be able to meet overall demand.

On the morning of the 8th of this month, an oil tanker loaded with 2 million barrels was docked at the GS Caltex crude oil pier in Yeosu, Jeollanam-do. This oil tanker, which departed from Yanbu Port in Saudi Arabia in mid-last month, is the first case to pass through the Red Sea bypass route instead of the Strait of Hormuz, which is blocked due to the Middle East war. Yonhap News Agency

In its May Oil Market Report released that day, the IEA forecasted this year’s global crude oil demand to reach 104 million barrels per day. This is a reduction of 1.3 million barrels per day compared to the forecast made before the outbreak of the war, which followed the U.S. and Israeli airstrikes on Iran in February.

Assuming that oil tanker traffic through the Strait of Hormuz gradually resumes starting next month, the IEA projected this year’s global crude oil supply at 102.2 million barrels per day. This means that supply will fall short of demand by 1.8 million barrels per day.

Before the outbreak of the war, in January and February of this year, global crude oil supply hovered around 107 million barrels per day.

The IEA stated that last month, global crude oil supply was recorded at 95.1 million barrels per day, resulting in a cumulative decrease of 12.8 million barrels per day since February. Production in Gulf countries affected by the blockade of the Strait of Hormuz fell by 14.4 million barrels per day compared to pre-war levels. However, this decline in Gulf region production was somewhat offset by increased production and exports from the Atlantic basin.

According to preliminary data estimated by the IEA, observed global crude oil inventories fell by 129 million barrels in March and decreased by an additional 117 million barrels last month. Due to disruptions in maritime trade through the Strait of Hormuz, onshore inventories dropped by 170 million barrels last month, while offshore inventories increased by 53 million barrels.

As IEA member countries released strategic reserves in response to the energy crisis, onshore inventories in OECD countries plunged by 146 million barrels, whereas onshore inventories in non-OECD countries declined by a relatively smaller 24 million barrels.

The IEA reported that cumulative supply losses from Gulf oil-producing countries, due to restricted passage through the Strait of Hormuz, have already exceeded 1 billion barrels, and currently, more than 14 million barrels of daily oil production has been halted. However, the agency noted that the market was already in a state of oversupply even before entering the crisis phase, and that both producers and consumers are responding to market signals, which has significantly narrowed the current supply-demand gap.

The IEA also noted a decrease in end-user consumption. It expected global oil demand in the second quarter of this year to decline by 2.4 million barrels per day compared to the same period last year. On an annual basis, this translates to a decrease of 420,000 barrels per day.

This content was produced with the assistance of AI translation services.