Global oil supply squeeze expected to deepen as summer demand peaks

Markets brace for prolonged energy strain as depleted reserves and disrupted Middle East flows tighten global supply chains.

Annahar

Global oil supply squeeze expected to deepen as summer demand peaks

Oil Facility (Archive).

The shortage in oil supplies is expected to intensify in the coming weeks, even if the United States and Iran reach a peace agreement to end their war, as the resumption of oil shipments from Gulf countries and their arrival at refineries worldwide will take weeks. Therefore, oil companies will continue to draw down their inventories to meet peak summer demand.

The world is using temporary reserves from commercial stocks, oil in transit and stored at sea, and emergency reserves to mitigate the effects of the war in the Middle East.

The full impact of the oil supply disruption on markets and the global economy has yet to be fully felt. Executives from major energy companies, investment banks, and analysts say it will take several months before Middle Eastern production and exports return to pre-war levels.

The rapid depletion of commercial stocks and emergency reserves comes at a time when inventories are typically building up as refineries and retailers prepare for peak demand during the Northern Hemisphere’s summer.

The global energy system will soon face peak demand while in a weakened state, unable to handle the sharp increase in consumption due to summer driving, aviation, agriculture, and shipping.

Executives and analysts say this will put pressure on the global energy system and extend the time it will take for oil producers and refineries to alleviate the shortage and bring elevated fuel prices back to pre-war levels.

Global oil supply squeeze expected to deepen as summer demand peaks

Global oil supply squeeze expected to deepen as summer demand peaks

Share on

Share on

Tags