Fatih Birol, the executive director of the International Energy Agency (IEA), has warned that countries will suffer if the Middle East conflict and the closure of the Strait of Hormuz persist.
Birol also urged countries to be prepared for “difficult
times in the energy market”, stressing that no nation is immune to the war’s
impact.
The IEA executive spoke during a meeting with the
International Monetary Fund (IMF) and World Bank Group (WBG) on Monday on the
sidelines of the ongoing IMF-WBG spring meetings in Washington DC.
The meeting, which assessed the impact of the conflict on
the global economy, is said to be part of the coordination group they
established in early April to maximise their institutions’ response to the
energy and economic impacts of the war.
Birol’s warning comes after the peace talks between the
United States (US) and Iran in Pakistan ended without an agreement.
President Donald Trump had threatened that the US navy would
begin a blockade of ships entering or leaving the Strait of Hormuz due to the
failed peace talks.
“The world is facing the greatest energy security challenge
in history. It is oil, it is natural gas, but it is also other vital
commodities, such as fertilizers, petrochemicals, helium and others,” Birol
said.
“The scale of the problem is huge, and countries will suffer
under this, some more than others, but I can tell you no country is immune to
this problem”.
Expressing his concern about the conflict, Birol said March
was a very difficult month for the world in terms of energy and economy,
cautioning that April may be worse.
“…because during the month of March, we have already
received cargoes which were loaded well before the crisis started to the
markets, and during the month of April, nothing has been loaded,” he said.
“The longer the disruption is, the more severe the problem
becomes.”
He said the IEA is monitoring more than 80 energy facilities
in the region, including oil fields, gas fields, refineries, and terminals, as
production plants continue to be targeted.
The expert said one-third of the damages in the facilities
“are severe or severely damaged”, noting that even when the problem is over, it
would still take a long time to get back to the level before the conflict
started.
“So, we should be ready for some difficult times in the
energy markets, for the economy, and especially for those oil and gas importing
developing countries whose muscles are much weaker than the others,” he said.
He said member countries of IEA have released 400 million
barrels of oil, the largest in history, “and it is hitting the markets”.
Birol said when he announced the release in March, prices
went down by “almost $20”.
“It is good, but this is not the solution. This is only
reducing the pain,” he said.
The IEA executive said the solution remains opening up the
Straits of Hormuz fully to trade.
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