International Energy Agency Issues Warning Regarding Potential Oil Shortage
In a speech delivered Thursday at Chatham House in London, International Energy Agency Executive Director Faith Birol warned of a possible "red zone" for the international oil market by the end of the summer. Summer brings an increased demand for oil, while conflict in the Middle East is restraining the supply.
A report released on Friday by the Energy Information Administration revealed that crude oil and petroleum liquids moving through the Strait of Hormuz fell to just 14.6 million barrels per day (10.7 million barrels of crude oil, 3.9 million in petroleum liquids) for Q1 2026, down from 20.7 million barrels compared to Q4 2025.
The IEA is releasing 2.5 million to 3 million barrels per day from the strategic reserve in response to the closure of the Strait of Hormuz, Birol said, but additional measures will be needed. An analysis by Reuters estimates that the reserve’s final supplies will be released by early August.
"The single most important solution is fully and unconditional opening of the Strait of Hormuz," Birol said.
At the center of the shortage is the 44% of base oil used in motor oil known as Group III, which comes from three producers in the Persian Gulf that have been stymied by the strait's closure.
“We’re looking at shortages — I have no doubt in my mind,” Holly Alfano, CEO of the Independent Lubricant Manufacturers Association (ILMA), an industry trade group, told CNN. “It’s a big mess—and it’s not going to be resolved quickly. It could take a year or so before we see any real relief.”
Low-viscosity engine oils, including 0W-20, 0W-16, and 0W-8, could have an “imminent shortage,” according to the ILMA. Among modern cars, 0W-20 accounts for about one-third of total motor oil demand for passenger cars, according to Petroleum Trends International.
PTI President and Founder Tom Glenn, who also serves as the publisher of JobbersWorld, noted to CNN that while motor oil distributors would increase prices for distributors by 70 to 80 cents per gallon in “a normal year,” some increases from producers now are approaching $5 per gallon or more.