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) stated on May 13 (local time) that, due to the aftermath of the Middle East war, global crude oil supply this year is expected to fall short of total 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 projected global crude oil demand for the year at 104 million barrels per day. This is 1.3 million barrels per day less than the forecast made before the outbreak of war caused by 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 a daily shortfall of 1.8 million barrels compared to demand.

In January and February of this year, before the war began, crude oil supply stood at around 107 million barrels per day.

The IEA reported that last month, global crude oil supply was 95.1 million barrels per day, resulting in a cumulative decrease of 12.8 million barrels per day since February. This significant drop was mainly attributed to a decline of 14.4 million barrels per day in output from Gulf states affected by the Strait of Hormuz blockade. However, the supply reduction in the Gulf region was partially offset by increased production and exports from the Atlantic basin.

According to the IEA’s estimated preliminary data, global observed crude oil inventories decreased by 129 million barrels in March and by an additional 117 million barrels last month. Due to disruptions in maritime trade through the Strait of Hormuz, onshore inventories fell 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. In contrast, onshore inventories in non-OECD countries decreased by a comparatively smaller amount of 24 million barrels.

The IEA noted that, as passage through the Strait of Hormuz remains restricted, cumulative supply losses from Gulf oil-producing countries have already exceeded 1 billion barrels, and currently, more than 14 million barrels of crude oil production per day has been halted. However, the agency assessed that before the crisis began, the market was already in a state of oversupply, and both producing and consuming countries are responding to market signals, which has considerably narrowed the current supply-demand gap.

The IEA also reported a decline in end-consumer demand. In the second quarter of this year, global oil demand is expected to decrease by 2.4 million barrels per day compared to the same period last year. On an annual basis, this amounts to a decrease of 420,000 barrels per day.

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