In the latest monthly oil market report, the International Energy Agency (IEA) has expressed concerns over the potential impact of the ongoing Israel-Hamas conflict on oil markets, signaling a period of heightened uncertainty.
While the conflict has yet to directly affect physical oil supply, the IEA highlighted that the energy markets will likely “remain on tenterhooks” as the crisis continues to evolve.
Describing the Middle East conflict as “fraught with uncertainty” with rapidly evolving events, the IEA stressed the need for the international community to closely monitor risks to the region’s oil flows, especially against a backdrop of already delicately balanced oil markets, as previously anticipated by the IEA.
Acknowledging a notable escalation in geopolitical risk, the IEA committed to vigilant monitoring of oil markets and assured readiness to take necessary actions to ensure adequate market supply in case of abrupt oil supply shortages. Such measures may include member countries releasing emergency oil stocks and implementing demand restraint strategies.
While Israel isn’t a significant oil producer and major oil infrastructure isn’t in close proximity to the Gaza Strip, the IEA emphasized that the Middle East constitutes over a third of global seaborne oil trade. The Israel-Hamas conflict has heightened fears that the ongoing fighting might disrupt regional energy production.