The Middle East conflict has tightened energy markets so much that crude oil, fuel, and natural gas prices are unlikely to return to pre-war levels in 2027, Fatih Birol, executive director of the International Energy Agency (IEA), said on Monday.
“I am afraid I don’t see any credible pathway that the markets will go next year, where we were before this war has started,” Birol said at the Singapore International Energy Week conference, as carried by Reuters.
In a speech at the event, Birol cautioned that energy markets are unlikely to quickly return to the conditions seen before the current crisis. The world faces a major energy security challenge as key global energy arteries come under pressure, the executive added, saying that trust is the scarcest commodity in the energy markets today.
High oil and fuel prices are hitting economies and budgets of many countries, especially in Asia, according to the head of the IEA.
The current crisis will result in acceleration of the “Age of electricity,” and of nuclear power capacity expansions, Birol said.
“Oil prices are flirting with $120 a barrel, and the prices for products are even much higher,” the IEA’s top executive said at a press conference at the event.
“I can tell you that the current price of oil is, for some countries, for example in Europe, maybe not so high and affordable. But in many parts of the world, having almost $120 oil prices is having a major impact on trade deficits,” Birol said.
The current crunch in the diesel and gasoil markets is set to extend into the middle of next year, IEA said in its monthly Oil Market Report for October.
Global fuel markets are set to remain tight until at least the middle of next year as the second quarter of 2027 will see unusually high planned maintenance that refiners have deferred from this year, Morgan Stanley analysts said last week.
By Michael Kern for Oilprice.com
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