The head of the International Energy Agency has issued a stark warning that the energy crisis triggered by the war in Iran represents a seismic event on par with the combined impact of the 1970s twin oil shocks and the fallout from Russia’s invasion of Ukraine. Fatih Birol, the IEA’s executive director, stated that the disruption to global energy markets from the conflict—including American and Israeli bombings in Iran and the closure of the strategic Strait of Hormuz—had not been initially grasped by world leaders, but now poses a grave threat to the global economy.
Speaking at the National Press Club in Canberra, Australia, Birol revealed that the crisis, which began with bombings against Tehran on February 28, has already led to the loss of approximately 11 million barrels of oil per day and about 140 billion cubic metres of natural gas. He compared this to the 1973 and 1979 oil crises, which saw 5 million barrels per day lost, and Russia’s 2022 invasion of Ukraine, which removed 75 bcm of gas from markets. “This crisis, as things stand now, is two oil crises and one gas crisis put all together,” Birol told journalists, emphasizing the unprecedented scale of the disruption.
The closure of the Strait of Hormuz, through which about 20% of the world’s oil supply flows, has been a critical factor, sparking shortages and global anxieties. Birol noted that at least 40 energy assets in the Gulf region have been severely damaged, meaning even an end to the conflict would not immediately restore supply. In response, the IEA has pushed for demand-side measures, such as increasing remote work, temporarily lowering highway speed limits, and reducing air travel, to mitigate the impact.
On March 11, the IEA oversaw the release of 400 million barrels of oil from strategic reserves—the largest emergency measure in its history—to address the crisis. Birol indicated he is consulting with leaders in Asia, Europe, and North America about a possible further release, noting the initial move represented only 20% of overall stocks. “If needed, we can put more oil in the markets, both crude oil and products, if it is needed,” he said, underscoring the agency’s readiness to act.
The geopolitical tensions have escalated, with U.S. President Donald Trump giving Iran a 48-hour deadline to reopen the Strait of Hormuz over the weekend, warning of the destruction of Iranian energy infrastructure if it fails to comply. In retaliation, Iran’s army has threatened to target U.S. and regional energy and desalination infrastructure. The Asia-Pacific region has been particularly hard hit by the closure, with Japan considering military deployment for minesweeping if a ceasefire is reached.
Birol stressed that reopening the Strait of Hormuz is the “single most important solution” to the crisis, but warned that the fallout extends beyond oil and gas to vital global economic arteries like petrochemicals, fertilizers, sulfur, and helium. As the deadline looms and tensions mount, the IEA’s intervention highlights the urgent need for coordinated international action to prevent a prolonged energy catastrophe with far-reaching economic consequences.
Source: The Guardian