'Oil Markets Nearing Red Zone': IEA Chief Calls For 'Full, Unconditional' Reopening Of Hormuz Amid Iran War

As the closure of the vital Strait of Hormuz in view of the war in West Asia continues to disrupt global energy markets, Fatih Birol, executive director of the International Energy Agency (IEA), issued a stark warning and said the crisis could deepen in the coming months.

The Strait of Hormuz — a critical maritime chokepoint that accounts for nearly one-fifth of the global oil and gas trade — has been blocked by Iran since early March following the joint U.S.-Israel strikes against the country.

Birol warned that the global oil markets could enter the “red zone” by July-August, as the world grapples with fuel price rise caused by the closure of Hormuz, The Guardian reported.

In simple terms, the term “red zone” implies an elevated financial crisis,

driven by credit expansion and increased asset prices.

Speaking at the London think tank Chatham House, Birol argued the only solution to the crisis was the “full and unconditional” reopening of the Strait of Hormuz.

He asserted that the IEA member nations were open to releasing more strategic oil reserves to maintain global markets, as they had done in March, when the war between the U.S.-Israel alliance and Iran was at its peak.

However, Birol also sounded the alarm about the restoring production and refining capacity in West Asia, saying the revival could take months or a year, even after tensions ease, according to The Guardian. 

He described the situation as worse than that in 2022, when Russia invaded Ukraine, highlighting around 14 million barrels of oil per day were currently missing from the market due to the West Asia conflict.

‘Total Control Over Hormuz’

U.S. President Donald Trump said Thursday that Washington has “total control” of the Strait of Hormuz through its naval blockade.

“We have total control of Strait of Hormuz with our blockade. Iran will not get nuclear weapon or we’ll do something drastic”, he said, speaking at the White House.

According to a report by New York Times, Iran is negotiating with the Gulf state of Oman to conclude a plan to charge vessels passing through the strait. The Trump administration, on the other hand, remains insistent that Tehran should reopen the critical waterway without restrictions or transit fee.

The war in West Asia began on February 28, when the U.S.-Israel alliance launched joint strikes on Iran. In retaliation, Tehran directed attacks towards the Gulf nations, targeting infrastructure and multiple energy facilities in these countries.

Iran also blocked the vital Strait of Hormuz, sending shockwaves through global markets and shifting the focal point of the conflict from the battlefield to the skyrocketing fuel prices.