The International Energy Agency has warned that global oil stocks are being drawn down at an unprecedented rate as supply disruptions from the ongoing conflict in Iran continue to mount. In its latest monthly report, the IEA revealed that global oil inventories fell by 129 million barrels in March and a further 117 million barrels in April, as countries tapped into their strategic reserves to offset the shortfall resulting from the Middle East crisis.
Record Reserve Releases
The IEA, which coordinated the largest release of government oil reserves in its history in mid-March, stated: "More than ten weeks after the war in the Middle East began, mounting supply losses from the Strait of Hormuz are depleting global oil inventories at a record pace." The agency also revised its demand forecast downward, citing the impact of soaring crude and refined product prices on consumption.
Demand Destruction
World oil demand is now expected to contract by 420,000 barrels per day this year, bringing total demand to 104 million barrels per day. This is 1.3 million barrels per day lower than the IEA's pre-war projections. The report notes that "the petrochemical and aviation sectors are currently most affected, but higher prices, a weaker economic environment and demand-saving measures will increasingly impact fuel use."
The warning comes as the global economy faces headwinds from elevated energy costs, with analysts predicting further volatility in oil markets if the conflict persists.
