The executive director of the International Energy Agency (IEA), Fatih Birol, has warned that global oil markets will enter the “red zone” by July and August as stocks dwindle and Middle Eastern exports decline. Speaking at the Chatham House thinktank in London, Birol noted that surging demand, low reserves, and reduced exports from the Middle East could cause a severe crunch during the summer travel season.
Birol said it was open to IEA members to release more strategic oil reserves, as they had done in March, adding that the IEA stood ready to coordinate. As much as 80 percent of the collective reserves remain unreleased. He emphasised that the most important solution to the energy shock caused by the Iran crisis would be a full and unconditional reopening of the Strait of Hormuz.
Birol described the current oil shock as more dramatic than the crises of 1973, 1979, and the 2022 disruption following Russia’s invasion of Ukraine. He stated that 14 million barrels of oil per day were missing from the market due to the disruption, and he saw no prospect of full recovery in oil production for at least a year.
He also warned that the reputation of the Middle East as a secure energy supplier had been damaged, predicting that countries would pay a premium for supplies from secure sources and for renewable energy. Birol noted that governments worldwide would review their energy strategies and look for new options, including renewables, nuclear, and, to a lesser extent, coal.
Meanwhile, Pakistan’s mediation efforts between Iran and the United States have encountered difficulties. Pakistan’s interior minister, Mohsin Naqvi, remains in Tehran, but a planned visit by military chief Field Marshal Asim Munir was postponed, suggesting limited progress. Iran’s supreme leader, Mojtaba Khamenei, reiterated that Iran would not allow its stockpiles of highly enriched uranium to be exported to a third country, though downblending under IAEA supervision remains possible.
President Donald Trump downplayed the importance of exporting the enriched uranium, suggesting it was more for public relations. He stated that the US has continuous surveillance of the sites and would eventually recover the material, possibly destroying it. Trump insisted, “We will get it. We don’t need it, we don’t want it. We’ll probably destroy it after we get it.”
