- IEA warns US-Iran tensions may disrupt global oil supply recovery and price stability
- Global oil markets are stabilizing but remain vulnerable to West Asia geopolitical risks
- Closure of Hormuz strait cut up to 14 million barrels per day, impacting the economy
The International Energy Agency (IEA) has warned that rising tensions between the United States and Iran could disrupt the fragile recovery in global oil supplies, raising concerns over energy security and price stability, according to a report.
The warning comes at a time when global oil markets are beginning to stabilise after months of supply adjustments. However, the agency conveyed that any further escalation in geopolitical tensions in West Asia could quickly reverse those gains, particularly if it affects the production or shipping routes in the region.
The IEA also noted that while oil markets have enough supplies for now, they are highly vulnerable to disruptions, Al Jazeera reported.
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West Asia accounts for a significant global share of the world's crude oil exports, making the region crucial to global energy flows. Any conflict involving major oil-producing countries or key maritime routes could tighten supplies and push prices higher.
The report claims that the IEA has revised its outlook for global oil demand and supply, but stressed that geopolitical risks continue to overshadow the market. The agency said the current balance could change rapidly if hostilities between Washington and Tehran intensify.
The IEA also reported that the effective closure of Hormuz had cut as much as 14 million barrels per day (bpd) of crude oil flows. The fuel shortage and increase in prices have hit the global economy hard. The report also highlighted that oil producers outside the Organisation of the Petroleum Exporting Countries (OPEC) are expected to continue increasing output, helping offset some supply risks.
At the same time, OPEC+ members are gradually restoring production cuts, which could provide additional barrels to the market if required.
Despite these factors, the IEA cautioned that geopolitical developments remain the biggest source of uncertainty. Any disruption to exports from the Gulf region or interference with vital shipping lanes could have immediate consequences for global crude supplies and fuel prices.
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The warning comes as investors and policymakers closely monitor developments between the US and Iran, with energy markets remaining sensitive to any signs of further escalation.
While supply conditions are currently stable, the IEA said sustained geopolitical tensions could undermine the market's recovery and add fresh volatility to oil prices.
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