IEA Warns of Growing Risks to Oil, Gas and Critical Mineral Markets Amid Escalating Regional Tensions
Global energy markets are facing renewed uncertainty as escalating conflict in the Middle East raises concerns over oil supplies, liquefied natural gas (LNG) exports and critical mineral supply chains, according to the latest update from the International Energy Agency (IEA).
The agency said recent hostilities affecting the Strait of Hormuz and regional energy infrastructure have intensified concerns over global energy security. Additional threats to the Bab el-Mandeb Strait, an increasingly important alternative shipping route, have further heightened market uncertainty as governments and industry monitor developments closely.
While global oil and gas markets have so far remained relatively stable, the IEA cautioned that ongoing geopolitical tensions continue to pose significant risks if disruptions worsen.
Alternative Supply Routes Help Cushion Oil Markets
Major producers offset some supply disruptions
The IEA said several factors have helped prevent a more severe supply shock despite the escalating conflict.
Executive Director Fatih Birol previously noted that major Gulf producers, particularly Saudi Arabia and the United Arab Emirates, have continued delivering oil through alternative export routes. Additional production from the United States, Brazil, Venezuela and Kazakhstan has also helped compensate for some supply losses.
On the demand side, China has contributed to market stability by significantly reducing crude oil imports compared with levels recorded before the conflict.
Emergency stock releases coordinated by IEA member countries have also played an important role in supporting markets. Since announcing a collective response on March 11, member nations have made approximately 290 million barrels of oil available, with additional volumes continuing to enter global markets.
According to the agency, IEA countries still retain more than one billion barrels of government-controlled emergency reserves, providing an important buffer should supply disruptions intensify.
Refined Fuel Markets Face Greater Pressure
Diesel and gasoline supplies remain tight
Despite steady crude oil deliveries, the IEA warned that refining activity has not recovered at the same pace, leaving markets for refined petroleum products considerably tighter than crude supplies.
The agency said declining commercial inventories and continued military escalation leave little room for complacency regarding energy security.
The IEA stressed that restoring unrestricted shipping through the Strait of Hormuz remains critical to preventing further deterioration in global oil markets.
Natural gas markets have experienced similar challenges. While alternative LNG exports—primarily from the United States—have replaced much of the disrupted Gulf supply, the agency warned that prolonged interruptions to Gulf exports could tighten global LNG markets for an extended period.
Critical Minerals Security Emerges as Strategic Priority
New report highlights growing supply concentration
Alongside concerns over fossil fuel supplies, the IEA released its 2026 Global Critical Minerals Outlook, warning that supply chain concentration remains a growing challenge for minerals essential to the global energy transition.
The report examines supply, demand and investment trends for key materials including copper, lithium, nickel, cobalt, graphite and rare earth elements, while also assessing broader strategic minerals used in advanced manufacturing, aerospace and high-technology industries.
According to the report, refining capacity has become even more geographically concentrated despite efforts to diversify production.
However, government investment has accelerated significantly. Public financing commitments aimed at expanding and diversifying critical mineral supply chains more than quadrupled between 2023 and 2025, reaching approximately $65 billion.
The IEA said the latest report also includes expanded policy recommendations covering emergency preparedness, market frameworks, workforce development and technology deployment to strengthen long-term supply resilience.
Energy Security Dominates High-Level US Meetings
Fatih Birol travelled to the United States during the month for a series of meetings with senior government officials and international policymakers focused on global energy security.
During the Aspen Security Forum in Colorado, discussions centered on the long-term implications of the Strait of Hormuz crisis, critical mineral security and expanding global energy access.
In Washington, Birol met with US Energy Secretary Chris Wright to discuss evolving oil and gas market conditions, electricity affordability and cooperation on clean cooking initiatives in Africa.
Additional meetings included discussions with Deputy Secretary of State Christopher Landau, White House Council of Economic Advisers Chair Christopher Phelan and Senator Lisa Murkowski regarding energy market stability and critical mineral security.
Global Electricity Demand Continues to Accelerate
Renewables expected to expand despite market volatility
The IEA also released its latest Electricity Mid-Year Update, forecasting stronger global electricity demand growth over the next two years despite continued energy market disruptions.
Global electricity consumption is projected to increase by 3.6% in 2026 and a further 3.8% in 2027, compared with 3% growth in 2025.
Demand is expected to remain particularly strong in China, India, the United States and the European Union, driven by industrial activity, air conditioning, electric vehicle adoption and expanding data centre operations.
The report also projects renewable energy to become the world’s largest source of electricity generation, with solar photovoltaic capacity expected to surpass wind power in 2026 as the second-largest renewable electricity source after hydropower.
The agency noted that continued investment in electricity grids, storage systems and flexible power infrastructure will be essential to maintaining reliable, affordable and secure electricity systems as global electrification accelerates.
Biogas Mapping and Energy Efficiency Highlighted
Beyond immediate market concerns, the IEA unveiled a new global mapping tool designed to identify opportunities for developing biogas and biomethane from organic waste streams.
The agency said the interactive platform is intended to help governments and industry identify projects capable of strengthening energy security while reducing emissions and creating local economic opportunities.
The IEA also highlighted the growing importance of energy efficiency, releasing a new episode of its Everything Energy podcast examining how improved efficiency measures could reduce energy costs, strengthen energy security and ease pressure on electricity systems during periods of market volatility.
Outlook Remains Highly Dependent on Regional Stability
Although emergency reserves, diversified supply sources and stronger government coordination have helped stabilize energy markets so far, the IEA said continued geopolitical tensions leave the global energy system vulnerable to further disruption.
With oil shipping routes, LNG exports and critical mineral supply chains all under increasing pressure, policymakers are expected to remain focused on strengthening resilience while monitoring developments across the Middle East.