Countries must resist the urge to hoard oil and fuel during the energy crisis triggered by the US-Israeli war on Iran, head of the International Energy Agency Fatih Birol warned on Sunday, with supplies expected to dwindle further if the Strait of Hormuz remains closed.
Birol praised Saudi Arabia for its rapid response to the crisis, after it rerouted over two-thirds of its oil exports through a pipeline to the Red Sea, bypassing the strait.
“I urge all countries not to impose bans or restrictions on exports,” Birol told the Financial Times. “It is the worst time when you look at the global oil markets. Their trade partners, their allies and their neighbors will suffer as a result.”
While he was careful not to name China directly, Birol’s comments appear to be aimed at Beijing.
China is the only major country to have banned the export of petrol, diesel and jet fuel in response to the five-week-old war, although India has imposed extra duties on exports.
Birol said “major countries in Asia who hold major refineries” should rethink any ban.
“If those countries continue to restrict or totally ban exports, the impact on the Asian markets will be dramatic.”
His plea for countries to avoid bans may also be pointed at the US, where rumors of a potential ban on refined fuel exports are circulating as gasoline prices pass $4 a gallon and California faces the threat of jet fuel shortages.
While the US supported a G7 call for no export bans, its energy secretary Chris Wright has so far only ruled out a ban on crude oil exports.
Birol said some countries are already hoarding energy, undermining the impact of the IEA’s move to release 400 million barrels of crude and fuel from emergency reserves in an effort to stabilize markets during the current conflict.
“Unfortunately, we see that some countries are adding to their existing stocks during our coordinated oil stock release,” he said. “They are stocking up. This is not helpful. In my view this is a time for all countries to prove they are a responsible member of the international community.”
Saudi response
Birol praised Saudi Arabia for its rapid response to the crisis, after it rerouted over two-thirds of its oil exports through a pipeline to the Red Sea, bypassing the strait.
He said he had been reassured by the “highest authorities in Saudi Arabia” that this key pipeline is “well protected.”
Birol, who as head of the IEA has been at the heart of discussions over how to respond to the crisis, warned that “in April, we will lose twice the amount of crude oil and [refined] products we lost in March” if the Hormuz Strait does not reopen to shipping.
In normal times, one-fifth of the world’s oil and liquefied natural gas flows through the waterway, which has been all but closed by Iranian threats to fire upon shipping.
“We are following all the key energy assets in the region on a daily or hourly basis,” he said, referring to oil and gas fields, pipelines, refineries and LNG terminals. “Currently there are 72 energy assets damaged and one-third are severely or very severely damaged,” he added.
Birol also said the current crisis would redraw the world’s energy system, as did previous crises in the 1970s and the one triggered by Russia’s full-scale invasion of Ukraine in 2022.
He predicted that the current crisis would trigger another nuclear revival, a boom in electric vehicles and a push for more renewables, as well as prompting some countries to burn more coal. But he said the gas industry, which had presented itself as a reliable supplier, would have to “work hard to regain its reputation” after two energy shocks in four years.
