IEA: Oil Supply Down 8M BPD in March, Stocks at 5Yr High


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- The International Energy Agency (IEA) in its latest oil 
market report released Thursday (3/12) projected global oil supply to plunge by 
8 million bpd this month as a result of production curtailments in the Middle 
East amid the ongoing U.S.-Israeli war on Iran. The largest emergency oil stock 
release in history, and observed global inventories at their highest since 
February 2021 can temporarily alleviate some supply tightness.

   The Paris-based energy watchdog estimated that producers in the region have 
cut output by at least 10 million bpd so far as tanker traffic through the 
Strait of Hormuz remained at a virtual standstill and storage tanks were filled 
to capacity. The report noted that supply losses are set to increase bar a 
rapid restoration of shipping flows. The largest oil supply disruption in 
history may be eased by higher output from OPEC+ members Russia and Kazakhstan, 
who restored output after suffering disruptions at the beginning of the year.

   Consequently, global oil supply is now projected to grow by 1.1 million bpd 
in 2026, less than half of the 2.4 million bpd forecasted in IEA's February 
report. High prices are also weighing on demand, which is now estimated to grow 
at a pace of 640,000 bpd this year, compared with 850,000 bpd in last month's 
report. The new assumptions still imply a global crude-overhang this year, 
albeit at 2.6 million bpd smaller than the 3.7 million bpd forecasted in 
previous iterations of the report.

   The IEA's 32 member countries on Wednesday unanimously approved the release 
of an unprecedented 400 million bbl from their joint reserves to help mitigate 
the ongoing supply crisis. Separately, the report pointed out that globally 
high commercial inventories may serve as a temporary stopgap. The agency 
assessed globally observed inventories at a five-year high of 8.2 billion bbl, 
some 1.85 billion bbl of which were part of strategic reserves.

   The report highlighted that restoring shipping through the Strait of Hormuz 
was the most important factor in reestablishing market stability. "The ultimate 
impact on oil and gas markets and the broader economy from the conflict will 
depend not only on the intensity of military attacks and any damage to energy 
assets, but also, crucially, on the duration of disruptions to shipping through 
the Strait of Hormuz," IEA noted.




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