IEA ready to further tap global oil reserves if needed, chief says
- S. enforces blockade near Strait of Hormuz, IEA studies impact on global oil supply
- IEA, World Bank, IMF form group to address war's economic impact, urge energy diversification
The head of the International Energy Agency, Fatih Birol, said on Monday he hopes another oil stockpile release is not needed, but added the agency was ready to act if the energy shock from the U.S.-Israeli war with Iran requires it.
The 32-member IEA agreed last month to release 400 million barrels of oil from reserves, the largest-ever coordinated release, in a bid to calm oil markets. The U.S., the world's largest oil and gas producer, agreed to release 172 million barrels from its Strategic Petroleum Reserve.
"I hope, very much hope, we don't need to do it, but if it is needed, we are ready to act," Birol said.
Birol reiterated at an Atlantic Council event in Washington that the war has resulted in the worst-ever global energy disruption and said more than 80 oil and gas facilities, including production, terminals and refineries across the Middle East, have been damaged. Benchmark oil prices are trading near $100 a barrel.
'REDUCING THE PAIN'. Due to the vast extent of the production shut-ins and closure of the Strait of Hormuz, the oil releases are "not a solution," Birol said, "it's just reducing the pain."
The U.S. military said in a note to seafarers seen by media on Monday that it will enforce a blockade in the Gulf of Oman and Arabian Sea east of the strait that will apply to all vessel traffic regardless of flag.
Birol told media on the sidelines of the event that the IEA is studying the blockade's impact on the global oil market.
Representing the IEA, Birol joined the heads of the World Bank and International Monetary Fund to launch a coordination group to respond to the energy and economic impacts of the Iran war.
"The impact of the war is substantial, global and highly asymmetric, disproportionately affecting energy importers, particularly low income countries," the institutions said in a joint statement.
Birol pointed to Iraq as an example of a country hit disproportionately hard. He said more than 90% of Iraq's government revenues, which cover 50 million people's salaries as well as pensions, rely on exports that have been curtailed by disruptions to the strait.
The IEA chief said his biggest takeaway from the war is that diversification is key for energy security.
"Diversify from whom you get your energy. Diversify your energies. Diversify your trade routes," he said.
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