In a statement issued on 21 July following recent developments in the conflict in the Middle East, IEA Executive Director Fatih Birol said threats to the Bab el-Mandeb Strait were exacerbating both concerns regarding security of supply and uncertainty over the market outlook.

Amongst the cushioning factors that continue to benefit crude oil markets, he noted significant supplies from Gulf producers, increased exports from the US, Brazil, Venezuela and Kazakhstan, and ongoing emergency stock releases by IEA Member countries – around 290 million barrels to date. On the demand side, he said, China has played an important role in stabilising markets by reducing its crude oil imports by nearly 50% compared with pre-war levels.

He warned, however, that there is no room for complacency on oil security amid the escalation in hostilities and a continued drawdown of available commercial inventories. Given that refinery activity and product supplies have not picked up as much as crude deliveries, markets for refined oil products, including diesel and gasoline, are considerably tighter than those for crude. Equally, in natural gas markets, while increased LNG flows from other markets, led by the United States and also Canada, have offset around 70% of the lost supply via the Strait of Hormuz, further delays in resuming Gulf exports risk keeping markets tighter for longer. This will be felt by all LNG importers, including Europe as it looks to refill its gas storage for next winter.

The IEA continues to maintain that a resolution to the ongoing conflict that includes a full and unconditional reopening of the Strait of Hormuz will be essential to avoid a further deterioration in global energy security.