The war in the Middle East and the closure of the Strait of Hormuz have created the largest energy security threat the world has ever faced, Fatih Birol, the executive director of the International Energy Agency (IEA), told CNBC on Thursday.
“We are facing the biggest energy security threat in history,” Birol told CNBC, building on the IEA’s assessment at the start of the war that the Middle East war is creating the biggest supply disruption in the history of the oil market.
“As of today, we’ve lost 13 million barrels per day of oil … and there are major disruptions in vital commodities,” Birol told CNBC today.
The IEA-coordinated record emergency release of 400 million barrels of oil stocks last month cannot offset the massive supply loss.
“This is only helping to reduce the pain, it will not be a cure,” Birol said early this month on the ‘In Good Company’ podcast hosted by Nicolai Tangen, the CEO of Norway’s sovereign wealth fund, the world’s biggest.
“The cure is opening up the Strait of Hormuz,” the head of the IEA said at the beginning of April.
The Strait of Hormuz has now been closed for nearly eight consecutive weeks, which has slashed crude supply to refiners, exports of fuels, and feedstocks for petrochemical and fertilizer production.
Earlier this week, Birol said the Middle East war and the crisis at the Strait of Hormuz could redraw the global energy map as the world’s most critical oil chokepoint is no longer seen as a reliable route for oil and gas supply.
“The era when the global economy was critically dependent on a single strait is becoming history,” Birol told Turkish newspaper Dünya.
“Even if everything returns to normal tomorrow, high prices and volatility in the markets will persist for a long time.”
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.
By Charles Kennedy for Oilprice.com
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