PARIS, May 13– Mounting supply losses from the Strait of Hormuz are drawing down global oil inventories “at a record pace” and “further price volatility appears likely” ahead of the peak summer demand period, the International Energy Agency (IEA) said on Wednesday.
In its latest Oil Market Report, the IEA noted that with Hormuz tanker traffic still restricted, cumulative supply losses from Gulf producers have exceeded 1 billion barrels, with more than 14 million barrels per day (mb/d) of oil now shut in, marking an unprecedented supply shock.
At the same time, stocks from commercial and government strategic storage sites in consuming countries are flowing into markets to offset part of the losses. Observed global inventories, including oil on water, were drawn down by 250 million barrels over March and April.
The report said the petrochemical sector is bearing the heaviest losses as feedstock availability tightens. Aviation activity also remains far below normal, easing some pressure on jet fuel prices, which nearly tripled after Middle Eastern exports were cut off. Higher prices, a weaker economic outlook and demand-saving measures are set to further curb global oil consumption.
The IEA forecast global oil demand to contract by 2.45 mb/d year-on-year in the second quarter of this year. For the year as a whole, global oil demand is expected to decline 104 mb/d, 1.3 mb/d below its pre-conflict forecast.
The report said demand may return to growth toward the end of the year if a deal to end the war allows flows through the Strait of Hormuz to gradually resume from the third quarter. But supply is likely to recover more slowly, leaving the oil market in deficit until the final quarter. With global inventories already falling at a record pace, further price volatility appears likely ahead of the peak summer demand period. (Namibia Daily News/ Xinhua)
