The Middle East war and the crisis at the Strait of Hormuz could redraw the global energy map as world’s most critical oil chokepoint is no longer seen as a reliable route for oil and gas supply, says Fatih Birol, the executive director of the International Energy Agency (IEA).
The Iran war and the de facto closure of the Strait of Hormuz have shown the world that the Strait has lost its status of a reliable energy export route, Birol told Turkish newspaper Dünya.
As a result, the crisis could lead to the global energy flows being redrawn, the official added.
“Even if the Strait of Hormuz opens tomorrow, returning to the pre-war period will require significant time, a recovery process, and large volumes of capital,” Birol said.
The IEA has estimated that the recovery of output to pre-war levels could take up to two years.
The timeline for the return of supply will vary from one country to another, Birol told Swiss newspaper Neue Zürcher Zeitung in an interview published on Friday, adding that Iraq would need much more time to restore output to pre-war levels compared to Saudi Arabia, for example.
“It will be a very difficult period for energy-importing countries. There is no magic wand that will immediately normalize the markets,” Birol said this week in the remarks to the Turkish outlet Dünya.
“The era when the global economy was critically dependent on a single strait is becoming history. Even if everything returns to normal tomorrow, high prices and volatility in the markets will persist for a long time,” Birol added.
The IEA estimated in its monthly report last week that global oil supply plunged by 10.1 million barrels per day (bpd) to 97 million bpd in March, due to attacks on energy infrastructure in the Middle East and ongoing restrictions to tanker movements through the Strait of Hormuz, leading to the largest disruption in history.
By Tsvetana Paraskova for Oilprice.com
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