IEA Warns Oil Price Turmoil Persists as Inventories Deplete at Record Pace

The International Energy Agency (IEA) warned that oil price volatility is far from over, with prices likely to rise further during the summer due to rapidly depleting global inventories. In its May report, the IEA noted that global oil supply dropped by 1.8 million barrels per day in April, bringing total losses to 12.8 million barrels per day since the onset of the U.S.-Israeli war with Iran on February 28. The conflict has severely disrupted supplies from the Strait of Hormuz, causing inventory depletion at a historic rate. Despite forecasting a demand contraction of 420,000 barrels per day by the end of 2026 due to economic weakness and high prices, the market is expected to remain in deficit. Brent crude traded near $107 per barrel, while WTI exceeded $101. In response, OPEC+ agreed to increase output, though this excludes the United Arab Emirates, which recently departed the cartel. Morgan Stanley described the situation as the largest supply disruption in oil market history, citing significant challenges in restarting oilfields and repairing infrastructure.