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Market Chatter: Oil Inventories May Reach Critical Lows Before Summer, IEA Official Says

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The International Energy Agency on Tuesday said oil stockpiles worldwide could potentially touch historical lows before the start of the Northern Hemisphere summer if withdrawals continue at current levels, Reuters reported Tuesday, citing an IEA official.

Addressing a gathering at the S&P Global Energy Middle East Petroleum and Gas Conference in London, the IEA's oil industry and markets division head Toril Bosoni said stock draws could push inventories to critical or historically low levels just before peak summer demand.

Bosoni said it would take six to eight months to reopen the Strait of Hormuz conduit, which accounts for one-fifth of total global oil and gas flows, if an agreement between Iran and US was reached today. The article did not elaborate on what would take place over that period.

While that long wait might strengthen the case for further emergency stock releases by the IEA, it was not currently being discussed, with almost half the initial 400 million barrels released already yet to reach the markets, Bosoni said.

Emergency stock releases were only a temporary solution and demand destruction was required to aid the markets amid huge supply losses, she added.

The IEA expects higher prices and a weaker economy to result in a decline in demand for transport fuels, Bosoni said, adding that the biggest adjustment factors in the markets have come from lower demand.

According to IEA estimates, about 14 million b/d of Gulf supply has been lost since the onset of the Iran war in late February.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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