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Oil Prices Soon to Reflect Severity of War Crisis, IEA Says
Recovery for Damaged Energy Facilities Could Take Two Years
Oil prices don’t yet reflect the severity of the unprecedented supply crisis caused by the Iran war, but they soon will, the head of the International Energy Agency said.
About 13 million barrels a day of oil supply have been shuttered by the conflict and the near-closure of the Strait of Hormuz, IEA Executive Director Fatih Birol said at an event hosted by the Atlantic Council.
More than 80 energy facilities have been damaged during the hostilities, and a recovery could take as long as two years, he warned.
The Paris-based agency has already described the current supply disruption as thebiggest in history.
“Prices are already high, but they are not reflecting the severity of the problem — I agree there is a disconnect,” Birol said. “But I think soon we will see they will converge, which is an extremely sensitive issue for the global economy.”
Oil futures are trading near $100 a barrel in London, which marks a rally of roughly 64% since the start of the year but is still considerably below the levels reached after Russia’s 2022 invasion of Ukraine, or the records set in 2008.
Excellent conversation with Helima Croft at event in Washington on the key implications of the current energy crisis and how is working with governments around the world to support energy security in these challenging times — Fatih Birol (@fbirol)
Last month, IEA members such as the U.S., Japan and Germany agreed an unprecedented release ofemergency oil stockpilesto help calm markets.
