Iran war triggers ‘unprecedented’ global energy crisis, IEA warns

The ongoing conflict involving Iran, the United States and Israel is fuelling what could become the most severe energy crisis the world has ever experienced, the head of the International Energy Agency has warned.

Speaking in a radio interview on Tuesday, Fatih Birol said the scale of disruption across oil and gas markets has already surpassed previous crises, describing the situation as “the biggest crisis in history”. He pointed to the compounding effects of turmoil in both petroleum and natural gas supplies, worsened by overlapping geopolitical conflicts.

At the centre of the crisis is the Middle East, where the war has significantly disrupted shipping through the Strait of Hormuz, a critical artery for global energy trade. Roughly 20 per cent of the world’s oil and liquefied natural gas passes through this narrow channel, making any disruption there immediately felt across international markets.

The current upheaval comes on top of earlier shocks triggered by the Russia-Ukraine war, which had already reshaped global energy flows by cutting off a major portion of Russian gas supplies to Europe. According to Birol, the combined impact of these crises has created an unprecedented strain on global energy systems, exceeding the disruptions seen during the oil shocks of the 1970s and the market instability of 2022.

Earlier this month, the IEA chief had indicated that the present conditions were more severe than the crises of 1973, 1979 and 2022 combined, all of which had caused significant economic turbulence worldwide.

In an effort to stabilise markets and curb surging oil prices, the IEA in March coordinated the release of 400 million barrels of oil from strategic reserves, the largest such intervention in its history. The move was aimed at easing supply shortages triggered by the escalating conflict and the resulting constraints on energy transport routes.

Despite these measures, concerns persist that prolonged instability in the region could further tighten supplies, drive up prices and ripple through global economies already grappling with inflation and energy insecurity.