Uche Cecil Izuora
The Executive Director, of the International Energy Agency (IEA) Birol, has warned that April could bring an even deeper oil supply crunch.
Oil markets jumped again Thursday after President Trump said US operations against Iran would continue well into April, renewing fears of a prolonged Strait of Hormuz disruption. Brent climbed back toward $110/bbl, prompting the IEA warning.
President Trump signaled that military operations against Iran would continue “well into April,” raising fears of prolonged disruption to one of the world’s most critical energy corridors
Global oil markets rallied sharply on Thursday, April 2, after US President Donald Trump signaled that military operations against Iran would continue “well into April,” raising fears of prolonged disruption to one of the world’s most critical energy corridors and triggering a fresh wave of volatility across commodities and financial markets.
The renewed advance came just one day after markets had briefly turned more optimistic on hopes that the war might wind down soon. But Trump’s tougher tone shifted sentiment quickly, with investors focusing again on the Strait of Hormuz, the critical waterway that normally carries about one-fifth of the world’s oil and LNG trade. With traffic through the strait still heavily disrupted, the market remains highly sensitive to any sign that the conflict could drag on.
Brent crude climbed toward $110/bbl in early trading, reversing earlier losses, as investors rapidly repriced geopolitical risk following Trump’s remarks that US forces would “finish the job” in Iran.
The latest market move also comes as the IEA warns the unfolding crisis could evolve into the largest energy supply shock in modern history.
Speaking this week, IEA Executive Director Fatih Birol said disruptions tied to the conflict are already mounting and could intensify significantly in April, with Europe among the most exposed regions.
“The next month, April, will be much worse than March,” Birol said in an interview with Nicolai Tangen, chief executive officer of Norway’s Norges Bank Investment Management, on Tangen’s “In Good Company” podcast.
The reason, Birol explained, is simple logistics. A trickle of cargo ships that entered the Strait before the US-Israel strikes on Iran have been continuing to deliver oil and gas to ports throughout March. “They are still coming to ports, still bringing oil and energy and other things,” he said. “In April, there is nothing.”
“When you look at the 1973 and 1979 crises, in both of them we lost each about 5 million b/d of oil. These oil crises led to global recession in many countries,” he said. “Today, we lost 12 million b/d—more than two of these oil crises put together.”
Birol said the agency is considering another release of strategic oil stocks as the Middle East conflict continues to disrupt energy markets.
The Agency assesses the market every day, even every hour, on a 24-hour basis. “If we think there is a need, we may well make a suggestion to release more reserves,” Birol said.
The most immediate concern is a shortage of jet fuel and diesel, he noted. “These are the main challenges and we are seeing it already in Asia, but soon, in April, or maybe beginning of May, it will come to Europe,” Birol continued.
Earlier this month, the IEA’s 32 member countries agreed to release a record 400 million bbl from emergency reserves to offset part of the supply losses tied to the Iran war.