Oil price crisis, what crisis? Asks Alex Brummer - as Iran war fears prove unfounded

 Three months ago, Fatih Birol, head of the International Energy Agency (IEA), warned that America’s war on Iran would cause an oil price shock greater than all those in the 1970s.

His stark warning led forecasters to dramatically lower projections for growth and predict an inflation surge that would smash living standards and force interest rates higher.

The IEA was wrong. Yes, oil and natural gas prices have been volatile, bouncing around each time that Donald Trump opens his mouth.

Instead of soaring prices, Brent crude and West Texas Intermediate are heading for a third monthly decline in a row and the biggest slump since the start of Covid in 2020. 

Instead of hitting the $200 a barrel predicted, Brent crude at around $73 a barrel is back to where it was before the conflict started.

 Labour politicians insist that the country is in the middle of a cost-of-living crisis, but it is more notional than real.

If energy prices are elevated, it is due to Net Zero. The latest information from farm and food producers is that home-grown grocery prices, especially for fresh produce, are easing.

The great sages at the IEA and the International Monetary Fund were in an apoplectic mood in April. But the global energy supply has changed dramatically.

The world went into the Iran war with a major surplus. Fracking turned the US from a Jimmy Carter-era supplicant and big importer into the world’s largest producer. Argentina became an oil exporter. The temporary lifting of sanctions on Russia has contributed to supplies.

Elsewhere, the IEA, the United States and, most importantly, China have turned on the taps at their strategic reserves.

At the beginning of the conflict, China sat on 82 days’ worth of supply. Demand is fierce with the People’s Republic burning through 17m barrels a day.

Even so, it is estimated, as peace tries to break out, that it has enough in store for another 11 weeks of conflict.

There have been bottlenecks in the developing world. The US, however, goes into its summer ‘driving season’ reasonably stocked. 

 Britain’s ‘just-in-time’ supplies of oil and liquefied natural gas make us more vulnerable to interruption of supply and higher prices than competitors. Nevertheless, Norway, a major UK supplier, has kept pumping.

Britain would be less vulnerable if the Rosebank and Jackdaw North Sea oilfields were opened, and storage at Rough, off the coast of Yorkshire, were restored.

By backing storage, Andy Burnham could future-proof supplies and re-industrialise Yorkshire. It should be simple for a Prime Minister willing to defy Ed Miliband’s net-zero fanaticism. Bring it on.
Spinning door

Energy price gyrations have been good for BP’s trading division but not impressive enough to save the skin of the group’s deputy chief executive Carol Howle.

She will be leaving later this year, having stepped up as interim chief executive as BP awaited the arrival of new boss Meg O’Neill. 

Since arriving, O’Neill has seen the shock departure of chairman Alfred Manifold after alleged ‘serious concerns’ about misconduct.