The Executive Director of the International Energy Agency (IEA), Fatih Birol, has expressed the agency’s concern about the escalating Israeli-Palestine war at the Gaza strip in view of the potential negative implications for the stability of the global oil market.
Birol, who expressed his concern during an interview with S&P Global Commodity Insights, warned that the oil market could become highly insecure courtesy of the ongoing war now causing insecurity around crude oil supplies.
The IEA chief noted that initial claims that oil and gas markets would not be negatively affected by the Israel-Hamas war were becoming increasingly weak as the war continued to escalate by the day.
He said: “Oil markets are on edge. The issue is whether one or more than one producing country is directly involved in the crisis or not. If that is the case, we may well see that the markets could be negatively affected in terms of supply disruptions and high oil prices.
“I think if I was not an energy person but a man on the street, I would think that the claims that oil and gas are safe and secure choices for energy are getting weaker and weaker. This is something that the oil and gas industry needs to think about.
“They are losing a lot from the narrative that they are a reliable, secure, and safe energy choice. When I look at the natural gas markets, what happened two years ago, with the Russia-Ukraine situation and gas prices suddenly increased substantially, they became volatile, and the availability of gas became a key question”, Birol stressed.
It would be recalled that in its October 2023 Commodity Outlook report, the World Bank noted that geopolitical risks had sharply escalated following the break out of the conflict in the Middle East and constituted the most important upside driver of oil prices.
