As the tensions remain high in Middle East, the International Energy Agency has raised concerns over the energy infrastructures being targeted during Iran-Israel conflict could have major impact on the global oil markets.
“The two countries have fought a shadow war for decades, but the current conflict is the most severe, with energy infrastructure also targeted for the first time,” said IEA.
The worry comes from the fact that Iran remains third-largest producer among members of the Organization of the Petroleum Exporting Countries. The concern is the fighting could disrupt its oil supply and raise prices, or Iran could retaliate by blocking shipping through the Strait of Hormuz.
“Iran has repeatedly threatened to close the key Strait of Hormuz if attacked. Closure of the Strait, even for a limited period, would have a major impact on global oil and gas markets. The Strait is the exit route from the Gulf for around 25% of the world’s oil supply – including from Saudi Arabia, the UAE, Kuwait, Qatar, Iraq and Iran – and most of the world’s spare production capacity,” said IEA’s outlook.
A conflict between Israel and Iran has highlighted the risk to Middle East supplies, helping send oil prices up 5% to above $74 a barrel on Friday. Still, the latest forecasts suggest ample supplies through 2030 if there are no major disruptions, the IEA said.
Iran partially suspended production at the world’s biggest natural gas field, South Pars, after an Israeli strike caused a fire in what would be the first Israeli attack on Iran’s oil and gas sector. Israel has halted more than 60% of its natural gas production capacity, including at the offshore Leviathan field, on security concerns, and has reported that Iranian strikes have damaged its Haifa refinery.
Total demand is forecast to reach 105.5 million bpd in 2030, down from 105.6 million in 2029.
Oil demand dropped dramatically in 2020, when countries locked down and shut their borders during the Covid pandemic, falling to 91.7 million bpd before steadily growing again in the following years.
Demand in the world’s top consumer, the United States, is expected to peak this year and decline in 2026 while consumption in China, the top importer of crude, will fall from 2028, according to the “Oil 2025” report.
Demand in the Middle East will also peak in 2027 and decline the following year.
Saudi Arabia will post the “single largest decline in oil demand for any country” in absolute terms through 2030 as the kingdom replaces crude with gas and renewable energy to produce power, the IEA said.
