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(TJV NEWS) The global oil market is under heavy pressure as inventories fall fast, raising fears of supply shortages and higher energy prices, Reuters reported. International Energy Agency (IEA) Executive Director Fatih Birol warned that commercial oil stocks are dropping at a rapid pace, with only a few weeks of supply left in some regions. His comments came during a G7 finance meeting in Paris where global energy risks were discussed.
Oil Inventories Falling Faster Than Expected
Birol said global oil inventories are shrinking quickly because demand remains strong while supply stays tight. He explained that the speed of the decline is increasing, which means the market has less protection against sudden shocks. Normally, inventories act as a safety buffer when supply is disrupted, but that buffer is getting smaller.
Strategic Oil Reserves Are Being Used but Are Limited
Governments have been releasing oil from strategic reserves to help stabilize the market. According to Birol, these releases are adding around 2.5 million barrels per day to global supply. However, he warned that these reserves are limited and cannot be relied on for the long term.
Seasonal Demand Is Increasing Pressure
The IEA chief also said seasonal demand is making the situation worse. As the Northern Hemisphere moves into spring and summer, oil use increases for gasoline due to travel, jet fuel for air travel, diesel for farming and industry, and fuel-linked fertilizer production. This seasonal demand is expected to drain already low inventories even faster.
Geopolitical Risks Are Tightening Supply
Global energy markets remain sensitive to geopolitical tensions, which are creating additional supply risks. Disruptions in shipping routes and lower supply flows have already tightened global oil availability. Analysts warn that any new escalation could quickly push the market into a shortage situation.
Gap Between Market Pricing and Reality
Birol also warned that there is a gap between financial markets and real physical oil supply. He said futures prices may not fully reflect how tight actual supply conditions are in the real world.
Bottom Line
Reuters reported that the IEA is warning global oil markets are entering a more dangerous phase, with falling inventories, limited backup reserves, and rising seasonal demand all tightening supply. If current trends continue, energy markets could become more volatile as peak demand season approaches.
