The West\u2019s international energy watchdog has warned that oil stockpiles were being drained at a record rate last month as the US\u2019s war in Iran continues to choke supply in an \u201cunprecedented\u201d supply shock.<\/p>\n
The International Energy Agency<\/a> revealed that around 4m barrels of oil a day were tapped from back-up supplies in April, within a detailed report on the global market.<\/p>\n It said: \u201cMore than ten weeks after the war in the Middle East began, mounting supply losses from the Strait of Hormuz are depleting global oil inventories at a record pace \u2026 Observed global inventories, including oil on water, were drawn down by 250m barrels over March and April, or 4m barrels per day.\u201d<\/p>\n The war has, in effect, closed the Strait of Hormuz through which tankers usually carry around a fifth of the world\u2019s seaborne crude. The fragile ceasefire has not significantly boosted traffic.<\/p>\n The IEA labelled it \u201can unprecedented supply shock\u201d, in words that chimed with fears of a looming fuel supply crunch, including of jet fuel into the peak summer holiday travel season.<\/p>\n The report included some stark numbers on the impact of the war: \u201cWith Hormuz tanker traffic still restricted, cumulative supply losses from Gulf producers already exceed 1bn barrels with more than 14 mb\/d of oil now shut in.<\/p>\n \u201cGlobal oil supply declined by a further 1.8m b\/d in April to 95.1m b\/d, taking total losses since February to 12.8m b\/d.\u201d<\/p>\n \u2018Unprecedented supply shock\u2019<\/p>\n The agency said that \u201cthe petrochemical and aviation sectors are currently most affected\u201d and pointed to price spikes ahead, as well as a \u201cplunge\u201d in \u201crefinery crude throughputs\u201d by 4.5m b\/d\u201d in the second quarter.<\/p>\n Then came an update from OPEC<\/a>, the representative body of some of the world\u2019s most influential oil-exporting nations.<\/p>\n It cut its 2026 forecast for global oil demand growth to 1.2m b\/d in its latest Monthly Oil Market report, trimmed from 1.4m b\/d in the previous edition.<\/p>\n It described the revised rise as \u201chealthy\u201d, but it reflected overall cuts to demand forecasts for the second, third and fourth quarters of the year.<\/p>\n OPEC said oil market traders trimmed their bets on a higher oil price, as \u201cnet long positions declined over April, mainly in ICE Brent\u201d, the main international crude benchmark. It cited \u201cprofit-taking from previously accumulated long positions\u201d amid \u201cmixed geopolitical signals and potential de-escalation\u201d in the Gulf.<\/p>\n Nonetheless, OPEC said, \u201cHedge funds and other money managers maintained a broadly bullish stance on the crude oil market\u201d in the month.<\/p>\n During April, Brent Crude peaked at around $140 a barrel, depending on the exactitudes of the contracts concerned. Crude for physical delivery in the month crossed above $141, at the height of the tensions, while the shortest-term futures contracts hit $138 a barrel.<\/p>\n On Wednesday, Brent was at $107.43, down on the day by about 0.3 percent.<\/p>\n Crude over $100 and beyond has stoked a wave of concern about an inflation shock, caused by higher energy prices rippling through the global economy.<\/p>\n The IEA said: \u201cA weaker economic environment and demand-saving measures will increasingly impact fuel use\u201d.<\/p>\n Russian oil exports rise<\/p>\n But the Paris-based outfit also pointed to increased supply away from the world\u2019s crude-producing heartlands.<\/p>\n It said: \u201cProducers outside of the Middle East also pushed output higher and lifted exports to record levels in response to the crisis.<\/p>\n \u201cIndeed, 2026 supply growth expectations from the Americas have been revised up by more than 600 kb\/d since the start of the year, to 1.5m b\/d on average.\u201d<\/p>\n And there was insight into the knock-on effects for a nation also at war, in Ukraine rather than the Middle East:<\/p>\n \u201cRussia\u2019s crude oil exports have also risen, as repeated attacks on its refineries have cut domestic use and led to higher shipments, while the United States temporarily waived sanctions on Russian oil on water,\u201d the agency said.<\/p>\n Overall, the IEA expects global oil demand to fall by 2.4m b\/d year-on-year in the second quarter.<\/p>\n \u201cFor now, the steepest losses are seen in the petrochemical sector, where feedstock availability is becoming increasingly constrained. Aviation activity is also running well below normal levels\u201d.<\/p>\n