SINGAPORE: Global energy markets are unlikely to return to pre-war conditions in 2027 as the Iran conflict continues to disrupt energy supplies, tighten market conditions and push up oil and refined fuel prices, International Energy Agency (IEA) Executive Director Fatih Birol has warned.
Thank you for reading this post, don't forget to subscribe!Speaking at the Singapore International Energy Week conference on Monday, Birol said there was no credible pathway for energy markets to return to their pre-war position next year, urging governments and businesses to make energy security their top priority.
The conflict, which began in late February, has significantly disrupted global energy flows and tightened a market that had been expected to record a surplus this year. The resulting supply concerns have driven up crude oil benchmarks and refined petroleum product prices.
Brent crude futures surged to $117 per barrel on Friday, their highest level in nearly six months, following further Houthi attacks in Saudi Arabia. Although prices eased on Monday, the benchmark remained around 59% above its pre-war level.
Birol said oil prices were approaching $120 per barrel, while prices for refined products had risen even more sharply. He declined to forecast future oil prices but warned that elevated crude prices could significantly worsen trade deficits in many countries.
While oil at these levels might remain manageable for some European economies, Birol said many countries were facing substantial economic pressure from the higher cost of energy imports.
He also expressed concern over the outlook for refined petroleum products, particularly diesel, as the Northern Hemisphere enters winter. Seasonal increases in diesel demand, combined with refinery maintenance, could place additional pressure on supplies and prices.
Europe faces particular challenges as countries reduce gas imports from Russia while disruptions linked to the Iran conflict constrain gas exports from Qatar and the United Arab Emirates. Birol warned that these developments could place significant pressure on European gas markets during the winter season.
The IEA chief also highlighted the potential for renewed growth in the nuclear power sector as governments seek to strengthen energy security and reduce exposure to supply disruptions.
According to a recent IEA survey cited by Birol, approximately 90 gigawatts of nuclear power capacity is currently under construction worldwide, the highest level in four decades.
The developments underscore the longer-term implications of the Iran conflict for global energy security, with governments and businesses facing continued uncertainty over fuel availability, import costs and supply-chain stability. Birol’s remarks suggest that even if hostilities ease, a return to pre-war energy market conditions by 2027 remains unlikely.
By Reuters
