Global Energy Crisis: The Impact of the Iran War

The ongoing conflict in Iran has triggered a severe global energy crisis, described by Fatih Birol, the Executive Director of the International Energy Agency (IEA), as worse than the combined effects of the oil shocks of the 1970s and the fallout from Russia's invasion of Ukraine. Speaking at the National Press Club in Canberra, Australia, on March 23, 2026, Birol highlighted that the crisis has resulted in a loss of approximately 11 million barrels of oil per day, surpassing the historical losses of 10 million barrels per day during the two oil crises of the 1970s. Additionally, the current situation has led to a reduction of around 140 billion cubic meters of liquefied natural gas (LNG) supplies.

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The crisis has been exacerbated by the effective closure of the Strait of Hormuz, a critical waterway through which about 20% of the world's oil supply is transported. Birol noted that at least 40 energy assets across nine countries have been severely damaged due to military actions related to the conflict. The IEA has coordinated the release of 400 million barrels of oil from strategic reserves, the largest emergency measure in its history, to alleviate rising prices and supply concerns.

IEA Chief Warns: Energy Crisis Exceeds 1970s Oil ShocksAl Jazeera (website)The GuardianCNBC TV18Global economy under ‘major threat’ from Middle East energy crisis: IEA chief

Birol emphasized the need for global cooperation to address the crisis, stating, "No country will be immune to the effects of this crisis if it continues to go in this direction." He also proposed demand-side measures, including promoting remote work and reducing speed limits, to mitigate energy consumption. In response to the escalating tensions, U.S. President Donald Trump issued a 48-hour ultimatum to Iran to reopen the Strait of Hormuz, threatening severe consequences if the demand was not met.

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Critics have raised concerns about the adequacy of the IEA's response and the potential for further escalation in the region. Iran's leadership has vowed to retaliate against any U.S. strikes on its energy infrastructure, indicating that the situation could worsen if diplomatic efforts fail. The Iranian parliament speaker warned that vital infrastructure in the region would be "irreversibly destroyed" if the U.S. acted on its threats.

Mideast war may cause worst energy crisis: IEA chief - Pakistan Today

While Birol's assessment indicates a significant energy crisis, there are discrepancies regarding the exact figures and impacts reported by different sources. Some reports suggest varying estimates of oil and gas losses, and the extent of damage to energy infrastructure remains unclear. Additionally, the timeline for restoring normal energy flows, even if the conflict were to cease, is uncertain, with Birol stating it could take at least six months for full restoration.

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As the deadline set by Trump approaches, the international community is on high alert, with potential implications for global oil prices and energy stability. The IEA continues to monitor the situation closely, advocating for immediate action to alleviate the escalating energy crisis. The outcome of the standoff over the Strait of Hormuz will be critical in determining the future of global energy markets.

IEA Chief Warns: Energy Crisis Exceeds 1970s Oil Shocks

• “This crisis, as things stand now, is two oil crises and one gas crisis put all together.” — Fatih Birol, Executive Director, IEA

The Guardian

• “No country will be immune to the effects of this crisis if it continues to go in this direction.” — Fatih Birol, Executive Director, IEA

Dawn

• “The single most important solution to this problem is opening up the Hormuz strait,” — Fatih Birol, Executive Director, IEA

The Guardian

• “We have stocks and we are incentivizing many countries with refineries to move faster than they normally do,” — Fatih Birol, Executive Director, IEA

IEA chief warns energy crisis worse than 1970s oil shocks

• “If Iran does not fully open the Strait of Hormuz, without any threat, within 48 hours from now, the United States of America will strike and completely destroy its various energy plants, starting with the largest!” — Donald Trump, President of the United States