The International Energy Agency (IEA) warned on July 21 that the escalation of hostilities between the United States and Iran was raising global oil supply concerns.
IEA Executive Director Fatih Birol said in a statement that the Paris-based body had been monitoring the situation in the Middle East closely, and found that the renewed violence affecting the Strait of Hormuz and energy infrastructure in the region “increases security of supply concerns and uncertainty over the market outlook.”
Daily Strikes
Jordan said on July 21 that it intercepted five drones arriving from Iran, while Tehran claimed to have targeted U.S. military assets in the country.
U.S. Central Command (CENTCOM) said American forces struck Iranian military command centers, maritime capabilities, missile and drone launch sites, and air defense systems.
The strikes were intended to weaken Iran’s ability to attack commercial vessels traveling through the Strait of Hormuz, CENTCOM said.
The military command said U.S. forces have helped facilitate the passage of about 900 commercial vessels carrying roughly 450 million barrels of crude oil through the strait since early May.
Trouble in the Red Sea
Birol added, in reference to the narrow waterway that serves as the entry point to the Red Sea on the opposite side of the Arabian Peninsula to the Persian Gulf, that “threats to the Bab el-Mandeb Strait, which has become increasingly important as a route to bypass the Strait of Hormuz, exacerbate these concerns further.”
The Bab el-Mandeb Strait is currently facing threats due to the escalation of violence between the Houthi terrorists in Yemen and Saudi Arabia.
In a statement released through the Yemen state-run SABA news agency, the Houthi armed forces wing said that it would impose the embargo, “effective immediately,” against Saudi Arabia.
The statement did not provide details on exactly what a maritime embargo would entail.
“We affirm the right of our great people to respond to the blockade with a blockade, and to respond to all escalation with all escalation, thus solidifying this equation,” the Houthis said.
They warned that “any foolish act committed by the reckless Saudi enemy through all escalation will be met with a comprehensive and decisive escalation.”
The remarks came after a fiery exchange between the Houthis and the Saudi-led coalition in Yemen last week, during which Sanaa International Airport and Abha Airport in Saudi Arabia were struck, threatening a truce that has been in place since 2022.
Markets Fine Despite Concerns
Despite the hostilities in the Middle East, the IEA said markets were still doing fine and added they were benefiting “from several cushioning factors.”
These include significant supplies from Gulf producers, particularly the United Arab Emirates and Saudi Arabia, which Birol said are “continuing to reach global markets via alternative routes to the Strait of Hormuz, as well as volumes still managing to pass through it,” adding that the body estimates that Gulf exports are “below their late-June highs but are still considerably higher than the levels seen between early March and mid-June.”
He also pointed to oil producers in other regions, namechecking the United States, Brazil, Venezuela, and Kazakhstan, which have “increased exports, offsetting some of the supply losses from the Gulf.”
Birol further stated that the emergency oil stock releases by IEA member countries had continued to provide significant relief to markets, saying that around 290 million barrels of oil have been released by its member countries since March 11, when it agreed to release a record 400 million barrels of oil from strategic stockpiles to help counter a surge in global crude prices following the outbreak of the U.S.–Iran war.
He also reasserted the IEA’s position that “a resolution to the ongoing conflict that includes a full and unconditional reopening of the Strait of Hormuz will be essential to avoid a further deterioration in global energy security.”
Oil prices have shot back up since the renewal of hostilities between Washington and Tehran, with Brent crude currently trading at just over $91 per barrel, up from slightly below $70 per barrel at the start of the month.
