IEA warning: Global commercial crude oil inventories are being depleted at an "extremely rapid pace"

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Global commercial oil inventories are declining at an accelerating rate, and the highest-ranking official of the International Energy Agency (IEA) has issued an urgent warning that the dual pressure of energy and food prices could significantly push up inflation.

On Monday, IEA Executive Director Fatih Birol told the media during the G7 finance ministers meeting in Paris that global commercial oil inventories are "being depleted very rapidly" and that he expects this trend to continue for "several weeks." He called on all parties to pay close attention to the rapid decline in inventories. He also pointed out that the sharp rise in fertilizer and diesel prices coincides with both the peak travel season and the start of the agricultural planting season, making the timing particularly sensitive.

Fatih Birol warned that these factors, combined with high energy prices, "could have a major impact on food prices and together form a strong upward push on inflation data." This statement has fueled further market concerns about global inflation prospects. French Finance Minister Roland Lescure said in a Bloomberg TV interview that, if necessary, G7 member states will release strategic oil reserves again.

Inventories Rapidly Depleting, Supply Tightening Signals Intensify

Fatih Birol’s warning echoes his statements from last week, reflecting the IEA’s continued concern over the current imbalance between supply and demand in the oil market. He noted that the speed at which commercial oil inventories are being depleted can no longer be ignored, and this trend will continue in the coming weeks. Commercial inventories are a key indicator of the immediate supply and demand conditions in the global oil market; their accelerated decline often signals a growing expectation of short-term supply tightness, thereby supporting oil prices.

Fatih Birol highlighted the special background of the current energy price shock: the sharp rise in fertilizer and diesel prices is occurring right as the peak travel season and spring planting season overlap. Fertilizer is a core input for agricultural production, while diesel is widely used for agricultural machinery and logistics transport. The simultaneous rise in both prices will directly increase agricultural production costs and ultimately be passed on to food retail. He pointed out that, the simultaneous rise in energy and food prices will provide a "major push" for global inflation data, making the price stability objectives of central banks an even greater challenge.

As for countermeasures, Roland Lescure, the French Finance Minister and host of this G7 finance minister meeting, said that G7 member states had already coordinated a release of strategic oil reserves several months ago and made it clear that "if necessary, we will take action again in the future." This statement indicates that the G7 views strategic reserves as a policy tool for regulating market supply and smoothing price fluctuations, but whether this can effectively alleviate the current accelerated depletion of inventories remains to be seen by the market.

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