IEA chief says energy markets won’t return to pre-Iran war levels

The International Energy Agency does not expect energy markets to return to pre-war conditions in 2027, according to Executive Director Fatih Birol, who spoke at the Singapore International Energy Week conference on Monday.

The Iran war, which started in late February, tightened a market that had been forecast to show a surplus this year. The conflict disrupted global energy flows and pushed up oil benchmarks and refined product prices.

"I am afraid I don’t see any credible pathway that the markets will go next year, where we were before this war has started," Birol said. "So therefore, we all need to get prepared, taking the energy security as a number one priority in our government, business world, but without forgetting what is the next chapter for the countries and for companies that are all here today."

Houthi attacks in Saudi Arabia on Friday drove Brent crude futures to $117 a barrel, the highest level in nearly six months. The contract eased on Monday but remained about 59% above its pre-war level.

"Oil prices are flirting with $120 a barrel and the prices for products are even much higher," Birol told a press conference.

Birol declined to provide an oil price forecast but noted that current prices near $120 a barrel are creating major impacts on trade deficits in many parts of the world, though some European countries may find them affordable.

The IEA chief expressed concern about winter demand for diesel, which is used for heating in parts of the West, as several refineries enter maintenance periods.

Europe faces a difficult winter as European countries have reduced gas imports from Russia. The Iran war created additional pressure by limiting gas exports from Qatar and the United Arab Emirates.

Birol expects nuclear power to make a "strong comeback" due to the current crisis. The IEA’s recent survey showed that 90 gigawatts of nuclear power plants are under construction, the highest level in four decades.