The recent escalation in hostilities between the US and Iran poses a significant threat to the fragile recovery of global oil supplies. The International Energy Agency (IEA) has warned that renewed fighting could derail hopes for a swift rebound in energy markets, which had shown signs of improvement following a temporary ceasefire. With the Strait of Hormuz, a crucial shipping route for oil, facing potential closure again, the implications for global oil prices and supply chains could be severe.
As the conflict continues, oil demand is projected to decline for the first time since 2020, exacerbating the ongoing energy crisis. The IEA noted that the effective closure of the strait has already reduced crude oil flows by up to 14 million barrels per day, leading to increased fuel shortages and rising prices worldwide. The situation remains precarious, with the IEA’s optimistic forecasts now at risk if hostilities persist.
Despite the current lull in attacks, the US military is reportedly prepared to resume operations if necessary, complicating diplomatic efforts aimed at stabilising the region. Countries in the Middle East, including Egypt and Gulf states, are urging restraint to prevent further escalation, highlighting the interconnectedness of regional stability and global energy markets.
The IEA’s outlook hinges on the assumption that a ceasefire will hold and that oil traffic through the Strait of Hormuz will gradually resume. Should this assumption fail, the global oil supply-demand balance could face renewed challenges, impacting economies worldwide and potentially leading to further price increases for consumers and businesses alike.
Source: Al Jazeera
