The International Energy Agency (IEA) has warned that growing supply disruptions linked to the Strait of Hormuz are reducing global oil inventories at a “record pace.”

In its latest Oil Market Report, the IEA stated that cumulative supply losses from Gulf producers have exceeded 1 billion barrels due to continued restrictions on tanker traffic through Hormuz. According to the agency, more than 14 million barrels per day of oil production have been shut in, pointing to what it described as an unprecedented supply shock.

The report noted that part of the losses are being offset through the release of oil from commercial and strategic reserves held by consumer countries. During March and April, global oil inventories — including crude stored at sea — reportedly declined by 250 million barrels.

The IEA stated that the petrochemical sector has suffered some of the heaviest losses because of tightening feedstock supplies. Aviation activity also remains significantly below normal levels, partially easing pressure on jet fuel prices, which have nearly tripled following disruptions to Middle Eastern exports.

The agency added that higher prices, weakening economic expectations, and measures aimed at reducing demand are expected to further suppress global oil consumption.

According to the report, global oil demand is projected to decline by 2.45 million barrels per day in the second quarter of this year compared to the previous year. For the full year, the IEA forecasts global oil demand growth to remain 1.3 million barrels per day below pre-conflict estimates.

The report also stated that if a ceasefire agreement allows oil flows through the Strait of Hormuz to gradually resume from the third quarter onward, demand could begin recovering toward the end of the year.

However, the agency warned that oil markets are likely to remain in deficit until the final quarter due to slower supply recovery. With global inventories already falling at record speed, further price volatility is expected ahead of the peak summer demand season. (ILKHA)