Mounting supply losses from the Strait of Hormuz are depleting global oil inventories “at a record pace,” and further price volatility is likely ahead of peak summer demand, the International Energy Agency said Wednesday.
In its monthly Oil Market Report, the agency said tanker restrictions through Hormuz have pushed cumulative supply losses from Gulf producers above 1 billion barrels. More than 14 million barrels per day of output is now shut in, an unprecedented supply shock.
Commercial and government strategic stocks in consuming countries are being released to offset part of the shortfall. Observed global inventories, including oil at sea, fell by 250 million barrels in March and April.
The petrochemical sector is facing the sharpest impact as feedstock supplies tighten, the report said. Aviation activity remains well below normal, easing some pressure on jet fuel prices, which nearly tripled after Middle Eastern exports were cut off. Higher prices, a weaker economic outlook and demand‑saving measures are expected to further curb consumption.
The IEA forecasts global oil demand to contract by 2.45 million barrels per day year‑on‑year in the second quarter. For 2024 as a whole, demand is expected to fall by 104 million barrels, about 1.3 million barrels per day below the agency’s pre‑conflict outlook.
Demand could return to growth late in the year if a deal to end the war allows flows through Hormuz to resume gradually from the third quarter, the report said. But supply is likely to recover more slowly, leaving the market in deficit until the final quarter. With inventories already falling at a record rate, the agency said more price volatility is likely as summer demand approaches.