Global oil markets are better prepared for possible disruptions to Iranian exports than they were last year when civil war in Libya displaced just under 2 percent of world supply, Maria van der Hoeven, the Executive Director of the International Energy Agency, told CNBC.
"The market was not prepared and the suppliers were not prepared" when the conflict that ousted Muammar Qaddafi from power engulfed Libya's strategic oil industry, halting supply and sending Brent crude oil prices to a three-year high of $127 a barrel in April 2011.
"What we have seen in the last few months is that there is a lot of extra oil in the market...and on the other hand we can see that industry has been preparing itself as well -- building up its reserves, building up its storage...everybody is prepared for what might happen when the Iranian sanctions will be in full swing," Van der Hoeven said on the sidelines of the World Gas Conference in Kuala Lumpur this week.
The U.S. and its allies have held Iran under tightening sanction pressures since 2010 to force the country to abandon its uranium enrichment program which Tehran maintains is being developed for peaceful purposes. The European Union will tighten sanctions further starting July 1 with an embargo on Iranian crude oil.
Van der Hoeven said top oil exporter Saudi Arabia - which has boosted output to around 10 million barrels a day, the highest level in decades - has helped keep global inventories well-stocked.
Though it was unlikely that the U.S. would release oil from its Strategic Petroleum Reserve to offset the impact of the sanctions, the IEA chief said the move couldn't be ruled out entirely.
Daniel Yergin, Chairman of energy consultancy IHS CERA said "a huge security cushion" in global inventories meant Iran supply risks were now very muted. "Six weeks ago there was a $20 security premium in Brent. That's all gone."
Releasing oil from the U.S. strategic reserves, Yergin added, would be hard for the Obama administration to justify given where oil prices are now, but the option remains. "Let's just say the key is in the ignition."