May 22: Impact of the US-Iran War on International Economy, Financial Markets, and Daily Life

Fatih Birol, Executive Director of the International Energy Agency (IEA), pointed out that the global oil market could enter a 'red zone' between July and August. Impacted by the conflict in the Middle East and energy shortages, the European Union has downgraded its Eurozone economic growth forecast for this year from 1.2% to 0.9%. The IEA warns that due to attacks on energy infrastructure and Iran's de facto blockade of 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 stated: 'If we do not see an improvement in the situation, we could enter the red zone in July or August.' He noted that the pre-existing surplus in the oil market before the Iran war, the 400 million barrels of strategic reserves coordinated by the IEA, and the consumption of commercial inventories are collectively insufficient to resolve the current crisis. The EU downgraded its Eurozone growth forecast to 0.9%, explaining that soaring fuel prices are forcing businesses and households to increase energy spending, leading to a decline in overall economic output. The EU also significantly raised its Eurozone inflation forecast for this year to 3.0%, far above the previous estimate of 1.9% and the 2% target set by the European Central Bank (ECB). Meanwhile, amid turmoil in global energy markets, Indian oil companies have begun switching to large-scale purchases of relatively cheaper Venezuelan crude oil. According to shipping data platform Kpler, India has been purchasing an average of 417,000 barrels of Venezuelan crude oil per day in May, a significant increase from 283,000 barrels per day in April. India, which previously imported almost no oil from Venezuela, has made a major strategic shift. As of May, Venezuela has become India's third-largest crude oil supplier, behind Russia and the United Arab Emirates.