The International Energy Agency has not started any discussions on oil stock releases but member countries have asked its secretariat to be vigilant and continue monitoring the Israel-Hamas situation in the Middle East and threats to energy infrastructure in Europe, Keisuke Sadamori, Director, Energy Markets and Security, said on the sidelines of the Asia Hydrogen & LNG Conference.

Oil and gas prices have been elevated in recent weeks as markets have priced in a geopolitical risk premium.

Sadamori said the IEA’s oil market report had said that in the second half of 2023, and in particular the fourth quarter, the market will be very tight because of expected demand growth and on the supply side due to voluntary cuts by certain OPEC+ countries.

“So that is happening at this moment,” he said, adding that the market became nervous with the attack on Israel by Hamas although it has not seen any actual physical supply disruptions happening yet.

“But if it spreads to the neighboring region of the Middle East, including Iran, then it could have [an] impact on the market. So what we can say is that we are currently monitoring the market very closely and stand ready, prepared for whatever option we may need,” Sadamori said.
He said no actual stock release actions are being discussed but member countries are asking for vigilance and to be updated with information on oil and gas. “At this moment, we have not started talking about taking any specific action,” he added.

Gas supply risks
Earlier this month, European gas prices jumped on news of an outage at the Balticconnector, the gas pipeline between Finland and Estonia, on concerns over the safety of gas pipeline infrastructure in Europe.

Sadamori said the Balticconnector outage was another area that member countries are concerned about, but the pipeline situation itself is not expected to have a major impact on gas availability in those regions.

But it did demonstrate the kind of potential threat to underwater pipeline and energy systems, and the IEA was having discussions with member countries on the need to be more vigilant for such disruptions to larger energy infrastructure that could have a substantial impact on gas availability in European countries, Sadamori said.

“We are reminded of the kind of additional security risk with those assets. But at this moment, we have not seen any kind of substantial impact,” he added.

Sadamori said the IEA was established as the organization to ensure the energy security, for both oil and gas, and was ready to respond in case of any possible disruptions.

Source: Platts