The International Energy Agency (IEA) has indicated that a resurgence of hostilities between the United States and Iran could disrupt efforts to rebuild global oil inventories later this year, once again highlighting the risks to the global economy should the conflict continue to escalate.
In its monthly report released on Friday, the Paris-based agency noted that global oil supply and demand dynamics had begun to normalize following a temporary peace agreement between the US and Iran last month. The agency stated that, driven by record production from the UAE, crude oil shipments from the Persian Gulf region have recovered to about two-thirds of normal levels, while global crude inventories have seen their first increase in four months.
The IEA said that with the resumption of shipments, the global oil market was on track to shift back into a supply surplus in the fourth quarter, with the potential for a larger surplus by 2027. However, this outlook is once again under threat due to a new wave of conflict this week, which has resulted in attacks on multiple tankers and slowed traffic through the Strait of Hormuz.
The agency warned: "The escalation of conflict casts a shadow over the outlook and could upend forecasts for the market shifting to a surplus next year."
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