Commercial oil inventories are being quickly depleted and there are only a few weeks worth left of them, International Energy Agency Fatih Birol warned.
Speaking to reporters in the sidelines of the G7 finance leaders meeting in Paris, Birol said the release of reserves has been adding 2.5 million barrels of oil per day to the market, but they "are not endless."
Birol went on to say that there was a large surplus of reserves before the war began, but the situation has now shifted drastically. "We should be aware of the fact that it is declining rapidly," Birol added.
Overall, more than a billion barrels of oil have not been produced since the conflict began in late February, according to the International Energy Agency's latest update. The figure amounts to about 14 million barrels per day.
"With global oil inventories already drawing at a record clip, further price volatility appears likely ahead of the peak summer demand period," the IEA said. It also noted that the gap between the supply and demand is narrower because the market had a surplus heading into this year, the group noted.
OPEC also noted that oil production fell more than 30% since the beginning of the Iran war. In its latest monthly update, OPEC also lowered its demand growth forecast for the year to about 1.2 million barrels per day, compared to 1.4 million from the last report.
The cartel's production dropped by 1.7 million of barrels per day. It has plunged by almost 10 million barrels per day since the war began.
The cartel last week this month agreed to a modest increase in oil production for June as the group continues adjusting output.
The alliance of Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman confirmed it will raise production by 188,000 barrels a day, slightly below the previous month's increase. The adjustment was agreed during a virtual meeting focused on global supply conditions and market stability.
Saudi Arabia also informed the cartel that its production of oil dropped more than 40% to its lowest level since 1990, according to a new report.
Bloomberg detailed that the cartel's monthly report showed that Saudi production fell by more than 650,000 barrels per day, clocking in at 6.316 million barrels per day. It is the lowest figure since the Gulf War in 1990 after Iraq's invasion of Kuwait.
The country went on to say that it has partially mitigated the impact of the Strait of Hormuz's closure by rerouting some exports through its east-west pipeline network.
