IEA: Global Oil Market May Enter 'Red Zone' in July-August
IEA Executive Director Fatih Birol warned that the global oil market could enter a 'red zone' between July and August due to peak summer demand and Middle East supply disruptions. With 14 million barrels per day offline due to the Strait of Hormuz blockade, he emphasized that strategic reserve releases are insufficient and that opening the strait is the only solution.
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- 📰 Published: May 22, 2026 at 11:46
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International Energy Agency (IEA) Executive Director Fatih Birol stated on the 21st that the global oil market may enter a 'red zone' between July and August, driven by the arrival of peak summer fuel demand, a lack of new oil supplies from the Middle East, and continuously declining inventories.
According to Reuters, Birol noted during a speech at the London-based think tank Chatham House that this is a warning regarding the oil supply crisis triggered by the Iran war.
'If we do not see an improvement in the situation, we may enter the red zone in July or August,' he said.
With energy infrastructure under attack and Iran effectively blockading the Strait of Hormuz, more than 14 million barrels of oil supply per day have been disrupted in the Middle East, creating the largest oil supply crisis in history.
Birol did not provide a specific definition for the 'red zone,' but pointed out that the pre-war supply surplus, combined with the 400 million barrels of strategic reserves coordinated by the IEA and the consumption of commercial inventories, remains insufficient to resolve the current crisis.
He emphasized, 'The most important and only solution is the full and unconditional opening of the Strait of Hormuz.'
Birol stated that the 32-member IEA has coordinated the largest strategic reserve release in history, currently flowing into the market at a rate of 2.5 to 3 million barrels per day.
Reuters estimates that if the first 400 million barrels are released at this pace, they will all enter the market by early August, coinciding with the 'red zone' warned of by Birol.
He added that the IEA is prepared to coordinate further releases of strategic reserves if necessary.
Birol noted that it will take a considerable amount of time for Middle Eastern oil production and refining capacity to return to pre-war levels, and that the pace of recovery will vary by country.
He admitted, 'My biggest concern is Iraq,' noting that Iraq's finances have been hit hard by reduced oil revenues. Furthermore, a lack of storage capacity has forced Iraq to shut down some oil fields, and restarting them is typically very complex.
In contrast, he noted that countries like Saudi Arabia and the United Arab Emirates, which possess capital and advanced technology, may recover more smoothly.
Brent crude futures are currently trading at around $108 per barrel. While this is down from the peak of $126 during the Iran war, it remains significantly higher than the pre-war level of $70.
According to Reuters, Birol noted during a speech at the London-based think tank Chatham House that this is a warning regarding the oil supply crisis triggered by the Iran war.
'If we do not see an improvement in the situation, we may enter the red zone in July or August,' he said.
With energy infrastructure under attack and Iran effectively blockading the Strait of Hormuz, more than 14 million barrels of oil supply per day have been disrupted in the Middle East, creating the largest oil supply crisis in history.
Birol did not provide a specific definition for the 'red zone,' but pointed out that the pre-war supply surplus, combined with the 400 million barrels of strategic reserves coordinated by the IEA and the consumption of commercial inventories, remains insufficient to resolve the current crisis.
He emphasized, 'The most important and only solution is the full and unconditional opening of the Strait of Hormuz.'
Birol stated that the 32-member IEA has coordinated the largest strategic reserve release in history, currently flowing into the market at a rate of 2.5 to 3 million barrels per day.
Reuters estimates that if the first 400 million barrels are released at this pace, they will all enter the market by early August, coinciding with the 'red zone' warned of by Birol.
He added that the IEA is prepared to coordinate further releases of strategic reserves if necessary.
Birol noted that it will take a considerable amount of time for Middle Eastern oil production and refining capacity to return to pre-war levels, and that the pace of recovery will vary by country.
He admitted, 'My biggest concern is Iraq,' noting that Iraq's finances have been hit hard by reduced oil revenues. Furthermore, a lack of storage capacity has forced Iraq to shut down some oil fields, and restarting them is typically very complex.
In contrast, he noted that countries like Saudi Arabia and the United Arab Emirates, which possess capital and advanced technology, may recover more smoothly.
Brent crude futures are currently trading at around $108 per barrel. While this is down from the peak of $126 during the Iran war, it remains significantly higher than the pre-war level of $70.
FAQ
How does this affect Taiwan's economy?
As Taiwan relies heavily on imported energy, rising oil prices pose risks of increased manufacturing costs and domestic inflation.