IEA warns: Iran conflict sparks an epic supply crisis; oil prices could experience a catch-up rally

Fatih Birol, Executive Director of the International Energy Agency (IEA), publicly warned thatcurrent oil prices have not yet fully reflected the unprecedented energy supply crisis triggered by the Iran-related geopolitical conflict, and prices may quickly rebound to catch up later.

At an Atlantic Council event, Birol pointed out that the escalation in the Middle East combined with the near-disruption of traffic through the Strait of Hormuzhas halted roughly 13 million barrels per day of crude oil supply. During the conflict, more than 80 energy facilities in the region were damaged,and the repair period for the affected capacity could be as long as two years.

The IEA had previously characterizedthis round of crude oil supply disruptions as the most severe in history. Birol acknowledged that, although oil prices are currently high, they are seriously disconnected from actual supply and demand; as the crisis continues to unfold, oil prices will gradually align with the supply shortfall, thereby imposing significant downward pressure on the global economy.