The International Energy Agency (IEA) said on Tuesday that the global oil market is set for a surplus and that it was ready to act in the event of a supply disruption, suggesting an Iran outage may have little impact.
“Heightened oil supply security concerns are set against a backdrop of a global market that – as we have been highlighting for some time – looks adequately supplied," the IEA said in a monthly report on Tuesday.
"For now, supply keeps flowing, and in the absence of a major disruption, the market is faced with a sizable surplus in the new year,” the Paris-based watchdog added.
An October 1 missile attack by key OPEC-member Iran on Israel sent oil prices soaring as investors fretted over a potential supply disruption from an Israeli counterattack on Iran's oil facilities.
Most of those gains have evaporated however, as buoyant global supply and lackluster demand in China sapped price momentum while no retaliation has yet materialized.
The IEA, which manages developed countries' emergency oil stocks, said government oil storage stood at over 1.2 billion barrels and spare capacity in OPEC+, which comprises the Organization of the Petroleum Exporting Countries and allies such as Russia, were at all time highs.
"As supply developments unfold, the IEA stands ready to act if necessary," the agency said.
Oil sites off the table
Prime Minister Benjamin Netanyahu assured US President Joe Biden in a phone call last week that Israel will refrain from attacking Iran's nuclear or energy facilities, US newspapers reported citing officials.
Oil prices tumbled nearly 5% toward a two-week low on Tuesday, driven by the U.S. media reports which eased fears of a supply disruption.
In response to the escalating conflict following its October attack on Israel, Tehran reportedly moved its tankers away from Kharg Island, one of its main oil export terminals in the Persian Gulf – a precautionary measure taken to shield the tankers from potential Israeli retaliatory strikes.
Iran had around 40 million barrels of floating oil storage in early October, enough to continue exports to China for one month.
While it is unclear whether Kharg Island is among Israel's potential targets, recent data obtained by Iran International shows that Iran's oil loadings have plummeted by nearly 70% in early October, indicating significant disruptions in its oil export capabilities.
As a major oil exporter and OPEC member, Iran’s oil exports make up 65% of its government budget and 8% of its GDP – though it recently fell short of realizing a quarter of its projected oil revenues.
Despite its escalatory attack on Israel in October, Tehran has since signaled an apparent desire to avoid an all-out war while also asserting its readiness for it if necessary.