World in energy crisis worse than 1970s’ oil shocks combined, IEA head says

The world is facing a worse energy crisis than the twin oil shocks of the 1970s and the fallout of the Ukraine war combined, the head of the International Energy Agency (IEA) has warned.

Speaking at a media event in Australia on Monday, IEA Executive Director Fatih Birol said the energy crunch prompted by the US-Israel war on Iran exceeded the 1973 and 1979 oil shocks and gas shortages stemming from Russia’s 2022 invasion of Ukraine put together.

“This crisis, as things stand, is now two oil crises and one gas crash put all together,” Birol said in remarks to the National Press Club of Australia in Canberra.

Birol said the effective closure of the Strait of Hormuz and attacks on energy facilities had reduced global oil supplies by about 11 million barrels per day (bpd), more than double the combined shortfalls of the 1970s’ crises.

He said liquefied natural gas (LNG) supplies had been reduced by about 140 billion cubic metres, compared with a shortfall of 75bcm in the aftermath of Ukraine’s invasion by Russia.

At least 40 energy facilities across nine countries have also been severely damaged in the conflict, the IEA chief said.

“The global economy is facing a major, major threat today, and I very much hope that this issue will be resolved as soon as possible,” Birol said.

Birol also expressed concern that the scale of the crisis had previously not been fully understood, explaining his decision to speak publicly about the situation last week for the first time.

On Friday, the Paris-based intergovernmental organisation, which earlier this month announced plans to coordinate the release of 400 million barrels of oil from emergency stockpiles, proposed a series of measures governments could take to reduce energy consumption.

The proposed measures include facilitating more remote working and carpooling, and lowering speed limits on motorways.

“I thought the depth of the problem was not well appreciated by the decision-makers around the world,” Birol said.

The IEA chief said he was in consultation with different countries about releasing more strategic oil reserves if needed, but the “single most important solution” to the crisis was to unblock the strait, which usually carries about one-fifth of global oil and LNG supplies.

Oil prices have surged more than 50 percent since the start of the war, which began with US-Israeli strikes on February 28, amid Iran’s effective blockade of the critical waterway.

US President Donald Trump on Saturday issued Iran a 48-hour ultimatum to unblock the strait or face the destruction of its power plants, the deadline for which is due to expire on Monday evening in the United States.

Iran has threatened to completely close the waterway, which has been transited by a small number of vessels not aligned with the US or Israel, and launch attacks on energy and water infrastructure across the region if the US strikes its power plants.