'April will be much worse than March': IEA warns of worsening oil shortages

The global oil supply deficit, which caused a sharp rise in energy prices, will intensify in April, said the head of the International Energy Agency (IEA) Fatih Birol in an interview with CNBC. Against the background of this warning, he did not rule out the possibility of a new release of strategic reserves of raw materials.

Oil supply shortages will worsen further amid a protracted war in the Middle East, IEA chief Fatih Birol warned. "April will be much worse than March," he said.

In March, supplies were partially supported by tankers that had traveled through the Strait of Hormuz before the conflict began, Birol explained. "They are still coming into the ports, still delivering oil, energy and other things. That's not going to happen in April. The oil losses in April will be double what they were in March. And there's also LNG and other commodities. This will affect inflation, in my opinion, slowing growth in many countries, especially in emerging economies. Energy rationing may start soon," the IEA head predicts.

He said the war in Iran has led to deeper supply shortages than in previous crises, including the energy shocks of the 1970s and the outbreak of war in Ukraine in 2022. Birol recalled that in 1973 and 1979, when the Doomsday War and the Iranian Revolution caused disruptions in Middle East oil exports, the market lost 5 million barrels per day. Now, according to the IEA head's estimate, it is about 12 barrels daily.

Birol added that the loss of gas supplies also exceeds the volumes that dropped out of the market after Russian gas supplies were cut four years ago. "The current crisis is bigger than those three combined," he said.

The International Energy Agency does not rule out the possibility of a new release of strategic oil reserves, as it already did in March, Birol said.

"We assess the market situation on a daily, if not hourly, round-the-clock basis. If we deem it necessary, we may well make a proposal [for additional release of reserves]. The main problem now is the shortage of aviation fuel and diesel. These are key challenges and we are already seeing them in Ma, and soon, in April or possibly early May, it will affect Europe," he said. At the same time, he noted that printing reserves alone will not solve the problem in the energy markets. The main task is to open the Strait of Hormuz.

"It only helps mitigate but is not a solution (...) We are buying some time, but I don't believe that releasing stocks will be the solution," he explained.

This article was AI-translated and verified by a human editor