Jordan Daily - More than 40 energy facilities across nine Middle Eastern countries have sustained severe damage due to conflict, potentially prolonging global supply chain disruptions even after the fighting ceases, according to the International Energy Agency (IEA).
IEA Executive Director Fatih Birol, speaking at the National Press Club in Canberra, Australia, at the start of a global tour, emphasized the extensive damage inflicted on critical infrastructure.
Birol noted that the damage will delay the restoration of oil fields, refineries, and pipelines to full operational capacity.
The disruptions extend beyond oil and gas, impacting vital components of the global economy, including petrochemicals, fertilizers, sulfur, and helium, Birol stated, adding that the disruption of these commodities would have significant consequences for the global economy.
The IEA is consulting with governments in Asia and Europe regarding the potential release of additional oil stocks, should it become necessary due to the ongoing conflict, Birol said. The agency will assess market conditions and consult with member nations before making any decisions.
IEA member countries previously agreed on March 11 to release a record 400 million barrels of oil from strategic reserves to address the surge in global crude oil prices, representing 20% of total stockpiles.
Birol clarified that there is no specific price threshold for crude oil that would automatically trigger another stock release.
While stock releases can help reassure markets, they are not a long-term solution and only mitigate the negative economic impacts, according to Birol.
Birol commenced his global tour in Canberra, highlighting the Asia-Pacific region's vulnerability to the oil crisis, given its reliance on oil and essential products, such as fertilizers and helium, transported through the Strait of Hormuz.
Following a meeting with Australian Prime Minister Anthony Albanese, Birol will travel to Japan before a G7 meeting later in the week.
Birol characterized the Middle East crisis as “very serious,” surpassing the combined impact of the 1970s oil shocks and the Russia-Ukraine war on gas supplies.
The conflict in the Middle East has resulted in the removal of 11 million barrels of oil per day from global supplies, exceeding the combined impact of previous oil shocks.
Birol stated that opening the Strait of Hormuz represents the optimal solution to the crisis.
Birol addressed his decision to speak publicly three weeks after the onset of the conflict, stating that global decision-makers had not fully grasped the severity of the situation and emphasized that stock releases are only a partial solution.
Measures previously outlined by the IEA, such as reduced speed limits and remote work policies, contributed to energy consumption reductions in Europe in 2022, according to Birol. However, each country must determine the most effective strategies for achieving fuel savings.
While Australia's liquid fuel reserves are below IEA guidelines, the current government has made significant efforts to improve them, and maintaining a 30-day diesel supply is considered a positive step, Birol added.
