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Commercial Oil Stocks Declining Rapidly, May Last Weeks, IEA's Birol Reportedly Says

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Commercial oil stockpiles are "declining rapidly" due to the ongoing energy supply crisis arising from the Middle East conflict, with inventories expected to last a few weeks, International Energy Agency Executive Director Fatih Birol said on Monday, multiple media outlets reported.

Addressing reporters on the sidelines of the Group of Seven finance leaders meeting in Paris, Birol said the release of stocks from the strategic reserves increased supply by about 2.5 million barrels of oil per day, but these reserves were limited, Reuters reported.

Birol warned that inventories are likely to squeezed further with the commencement of the travel and planting season, which is expected to lead to higher demand for diesel, fertilizer, jet fuel and gasoline.

The IEA chief noted that the Iran war and the closure of the Strait of Hormuz has led to a rapid shift in the energy markets from the high surplus in oil and commercial stocks just before the pre-war period.

In its monthly oil market report published last week, the IEA said the global energy market is grappling with an unprecedented supply shock that has shut in 14.4 million barrels per day of Gulf production.

The effective closure of the Strait of Hormuz has already resulted in cumulative supply losses exceeding one billion barrels, forcing global oil inventories to draw down at a record pace of 4 mmbbl/d over March and April, the agency noted.

The supply vacuum has triggered a massive realignment of global trade flows, with Atlantic Basin exports surging by 3.5 mmbbl/d since February to reach hard-hit East of Suez markets, it said.

has reached out to IEA for additional comment.

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