IEA Chief Compares Iran War Energy Crisis to 1970s Oil Shocks and Ukraine Conflict Fallout
Fatih Birol, the executive director of the International Energy Agency, has issued a stark warning that the global energy crisis triggered by the war in Iran is equivalent in scale to the combined impact of the twin oil shocks of the 1970s and the fallout from Russia's invasion of Ukraine. Speaking at the National Press Club in Canberra, Australia, Birol emphasised that the depth of the problems in energy markets, stemming from American and Israeli bombings in Iran and the closure of the strategic Strait of Hormuz, was not initially fully grasped by world leaders.
Unprecedented Losses in Oil and Gas Supplies
Birol highlighted that the current crisis, which began with bombings against the Tehran regime on 28 February, has already resulted in the loss of approximately 11 million barrels of oil per day and about 140 billion cubic metres of natural gas. In comparison, the 1973 and 1979 oil crises saw daily losses of around 5 million barrels of oil, while Russia's 2022 invasion of Ukraine removed about 75 billion cubic metres of gas from international markets. "This crisis, as things stand now, is two oil crises and one gas crisis put all together," Birol told journalists before meetings with Australian Prime Minister Anthony Albanese.
Critical Impact on Global Energy Arteries
The IEA chief warned that the fallout could be severely compounded by disruptions to what he termed the "vital arteries of the global economy," including petrochemicals, fertilisers, sulphur, and helium. At least 40 energy assets in the Gulf region have been severely or very severely damaged, meaning that even an end to the conflict would not immediately restore energy supply. The closure of the Strait of Hormuz, through which about 20% of the world's oil supply is transported, has sparked shortages and growing anxieties worldwide, particularly affecting the Asia-Pacific region.
Emergency Measures and Global Responses
In response to the escalating crisis, Birol oversaw the release of 400 million barrels of oil from strategic reserves on 11 March, the largest emergency measure in the IEA's history. He noted that this initial move represented only 20% of overall stocks and that the agency is consulting with world leaders in Asia, Europe, and North America about a possible further release. "If needed, we can put more oil in the markets, both crude oil and products, if it is needed," he said, adding that such stock releases help comfort markets but are not a complete solution, only reducing economic pain.
Political Tensions and Threats
US President Donald Trump has given Iran 48 hours to reopen the Strait of Hormuz to shipping, warning that Tehran would face the destruction of its energy infrastructure if it fails to comply. In retaliation, Iran's army has threatened to target energy and desalination infrastructure belonging to the US and allied regimes in the region. Trump has criticised NATO members, as well as Australia, Japan, and South Korea, for not assisting in the strait, with Japan indicating it might consider military deployment for minesweeping if a ceasefire is reached.
Call for Global Cooperation
Birol stressed that no country will be immune to the effects of this crisis if it continues, underscoring the need for global efforts. He pointed out that while changes to diesel and jet fuel supply are being felt in Europe, increased oil production in Canada and Mexico could offer some relief. However, defensive positions on fuel holdings in Asian countries pose a problem for the world economy. "I think no country will be immune to the effects of this crisis if it continues to go in this direction, so there is a need for global efforts," Birol concluded, urging leaders to prioritise reopening the Hormuz strait as the single most important solution.
