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The International Energy Agency (IEA) is very worried about the growing tension in the Middle East and stands ready to act in case of physical disruption to oil supply, the IEA’s executive director Fatih Birol said on Monday.
“We are monitoring the situation very closely and are very worried. In case of physical disruption, we are ready to act in an appropriate way,” Birol said at a conference on energy efficiency in Dublin, as carried by Reuters.
The tension in the Middle East nearly reached a tipping point last week after Iran shot down a U.S. drone over the Strait of Hormuz, claiming it had violated Iran’s air space. The U.S. says that the drone was in international air space.
The U.S. had apparently prepared a response to the downing of the drone with strikes on Iranian targets, before President Trump stopped a planned strike 10 minutes before it begins, because, he said, it was “not proportionate to shooting down an unmanned drone.”
Earlier this month, two oil tankers were attacked in the Gulf of Oman, just outside the Strait of Hormuz, the vital shipping lane which connects the Persian Gulf with the Gulf of Oman and the open seas and which accounts for around 30 percent of all seaborne-traded crude oil and other liquids.
According to the IEA’s Birol, the oil price response to the heightened tension between the U.S. and Iran and in the Middle East as a whole would have been much greater were it not for the surging U.S. shale oil production, which has been capping significant price gains.
“[D]espite those attacks, we have not seen a major impact on the prices and the main reason is United States shale oil prices are growing so strongly that there is a lot of oil in the markets now,” Birol said on Monday, noting that a lid on oil price gains is “very good news for consumers around the world.”
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.