IEA warns US-Iran clash could derail oil market recovery

The International Energy Agency warned on Friday that the latest round of hostilities between the United States and Iran could extend the global energy crisis and hinder the recovery of oil markets. The agency noted that world oil demand is set to fall for the first time since 2020, while the conflict continues to disrupt production and exports across the Middle East.

According to the IEA’s monthly oil market report, a memorandum of understanding reached last month had helped reopen the Strait of Hormuz, allowing global oil supply to rise by 4.1 million barrels per day in June, though it remained 9.4 million barrels per day below pre-war levels. The agency had projected a surplus of 4.62 million barrels per day by 2027, assuming the strait returned to full operation. Renewed fighting, however, has again halted shipping through the waterway, which previously carried about one-fifth of global oil and LNG exports.

"Washington remains committed to negotiations with Tehran and technical talks for a lasting peace deal will continue," a U.S. official told Al Jazeera.

U.S. sources quoted by media said a temporary pause in attacks was intended to give diplomacy a chance to work, while the military stays ready to resume strikes if needed. Regional actors, including Pakistan, Qatar, Egypt and Gulf states, have been reported to engage in back-channel talks aimed at restoring a ceasefire.

Despite the disruption, Brent crude prices were relatively stable at $76.37 a barrel in early Friday trading, up about $4 from a week earlier. Analysts attributed the steadiness to market confidence that the situation would stabilize, though tightening inventories could pressure prices higher in the coming weeks.

The United Nations has cautioned that further escalation could have catastrophic economic and security consequences for the region and the global economy.