IEA warns Middle East oil disruptions set to hit Europe in April

OSLO: Oil supply disruptions from the Middle East will rise in April and begin to impact Europe’s economy as the closure of the Strait of Hormuz severely curbs supplies, International Energy Agency head Fatih Birol said on Wednesday.

More than 12 million barrels of oil have been lost since the start of the U.S.-Israel war on Iran due to Tehran’s attacks on energy assets in the region and restrictions on shipping through the Strait, he added.

“The loss of oil in April will be twice the oil loss in March, on top of the loss of LNG… It will come through inflation and will cut economic growth in many countries,” Birol told a podcast with Nicolai Tangen, the head of Norway’s sovereign wealth fund.

Losses are expected to widen in April, since a number of oil and LNG cargoes arriving in March were contracted before the war and continued towards their destinations, he added.

IEA head says more oil stocks can be released if necessary

The biggest problem is the lack of jet fuel and diesel which has already affected Asian countries but was also due to hit Europe, Birol said.

“We are seeing that in Asia, but soon, I think, in April or May, it would come to Europe,” he added.

Birol repeated that the IEA was considering a further release of strategic reserves after its members agreed to release a record 400 million barrels of oil.

The current oil and liquefied natural gas (LNG) supply disruption is worse than the two oil crises in 1973 and 1979, as well as the loss of Russian gas volumes due to Moscow’s invasion of Ukraine in 2022, combined, Birol said.

About 40 key energy assets in the Middle East have been damaged since the start of the war, and it would take some time to get them back, he added.

“We are heading to a major, major disruption and the biggest in history up to now,” Birol said.