IEA Warns Oil Markets Could Enter Red Zone by July

Oil markets could enter a "red zone" by July or August as global stocks deplete and summer demand rises, the head of the International Energy Agency said. IEA Executive Director Fatih Birol said the single most important solution to the ongoing energy shock is a full and unconditional reopening of the strategically vital Strait of Hormuz.

Birol made the remarks during a Chatham House session on the Strait of Hormuz crisis and global energy security. S. and Israeli-led strikes against Iran began in February. The IEA has previously described the current global market disruption as the most severe in its history.

Birol said the market entered the crisis in a "fortunate" position with a surplus that helped absorb the initial shock, but those stocks are now eroding.

If the strait does not reopen and no new oil supplies come online from the Middle East, an ongoing drawdown in global stockpiles combined with rising summer travel demand means markets "may be entering the red zone in July or August," Birol said. His comments came on Thursday during the session focused on energy security implications of the current crisis.

>"Oil markets could soon enter a 'red zone' as global stocks deplete and as demand picks up during the summer travel season. Birol said the market had benefited from entering the crisis with a surplus to help absorb the shock, though those stocks are now eroding.