IEA Predicts Deepening Oil Supply Gap Amid Conflict

The International Energy Agency (IEA) has revised its forecast for global oil supply and demand, predicting that the gap between the two will deepen this year. The agency expects a decline in world oil supply of 5.7-million barrels a day, or about 6%, due to delays in the return of normal Gulf flows, which have been hindered by the ongoing conflict in Iran and the Russia-Ukraine war.

The IEA attributes the increased gap between supply and demand to a combination of factors, including attacks on oil tankers in Middle East shipping routes. As a result, crude prices have risen towards $110 a barrel, with fuel prices such as diesel hitting record highs.

The agency emphasizes that the need for progress in resolving these conflicts is greater than ever to avoid further market tightening. The IEA also notes that inventories have played a crucial role in balancing the market, but buffers are shrinking and the global refining system is stretched to the limit.