Growing tensions in Middle East heighten global oil security risks, says IEA

New Delhi: Commenting on the escalation in tension in the Middle East, the International Energy Agency (IEA) flagged the risk of increased volatility in global oil markets and stressed the importance of maintaining oil security. “Mounting tensions in the Middle East spiked further over the weekend with Iranian air attacks on Israeli military facilities, raising the risk of increased volatility in oil markets and providing a fresh reminder of the importance of oil security,” said the IEA in a statement on Monday.

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“Global oil markets were already tight before the weekend’s events, with the deepening geopolitical tensions in the Middle East focusing attention on the security of supply, according to the latest edition of our monthly Oil Market Report. We at the IEA, as always, are tracking the developments closely,” it said.

As OPEC+ curbs supplies, non-OPEC+ producers to drive world oil supply: IEA

In its oil market report for April 2024 released last week, the IEA said that sustained output curbs by OPEC+ mean that non-OPEC+ producers, led by the Americas, are expected to continue driving world oil supply growth through 2025. Additional volumes from the United States, Brazil, Guyana and Canada alone could come close to meeting world oil demand growth for this year and next, said the report.

It also said that global oil demand growth is losing momentum, rising by only 1.6 million barrels per day (mb/d) in the first quarter of 2024, lower by 120,000 barrels per day from previous forecasts. “According to our latest forecasts, it’s expected to ease to 1.2 million barrels a day this year and 1.1 million barrels per day in 2025 – bringing a peak in consumption by the end of this decade into view,” said the report.  

“With the strong recovery in demand following the disruptions of the Covid-19 pandemic having largely run its course, structural factors are set to lead to a gradual easing of oil demand growth over the rest of this decade. These include continued market share gains by EVs, steady improvements in the fuel economy of vehicles, and efforts in the Middle East to reduce the use of oil for power generation,” said the report.

The Brent international oil price benchmark breached the threshold of USD 90 a barrel earlier this month, reaching its highest level since October 2023 amid the heightened tensions between Israel and Iran.

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