Fatih Birol, head of the International Energy Agency, warned on Monday in Paris that global commercial oil inventories are declining rapidly, with only several weeks of supply remaining as conflict involving Iran and disruptions to shipping through the Strait of Hormuz tighten markets.
Speaking during a meeting of Group of Seven finance officials, Birol said emergency releases from strategic petroleum reserves have injected about 2.5 million barrels per day into global markets, but cautioned that such reserves are finite and cannot offset prolonged shortages indefinitely.
He said rising seasonal demand linked to spring planting and peak summer travel in the Northern Hemisphere is expected to accelerate inventory drawdowns, increasing consumption of diesel, gasoline, jet fuel and fertilizer-related fuels.
Birol highlighted a growing disconnect between physical oil market conditions and financial market perceptions, noting that traders may underestimate the speed at which supplies are tightening.
According to the IEA chief, oil markets shifted sharply from surplus conditions before U.S. and Israeli military actions against Iran in late February to a supply-constrained environment driven by the ongoing conflict.
The agency previously reported that global oil inventories fell by a record 246 million barrels during March and April, reflecting one of the fastest stockpile declines on record.
The 32-member IEA coordinated a historic release of 400 million barrels from strategic reserves in March to stabilize markets, with around 164 million barrels deployed by early May.
The agency now expects global oil supply to contract by about 3.9 million barrels per day in 2026 because of war-related disruptions, a significant downgrade from earlier projections of a 1.5 million bpd decline.
The revised outlook marks a reversal from previous IEA expectations that oil markets would remain oversupplied this year, underscoring mounting risks to energy security and price stability worldwide.
Birol said inventories remain sufficient for several weeks but stressed that the pace of depletion requires close monitoring as geopolitical tensions continue to reshape global energy markets.