International Energy Agency Executive Director Fatih Birol warned Monday that the global energy crisis stemming from the war in Iran has equaled the combined severity of the 1970s twin oil shocks and the fallout from Russia’s invasion of Ukraine. The macroeconomic assessment comes as U.S. President Donald Trump postponed planned military strikes against Iranian power plants for a five-day period, citing productive diplomatic conversations aimed at resolving the blockade of the Strait of Hormuz.
Speaking at the National Press Club of Australia on March 23, Birol stated the conflict has removed 11 million barrels of oil per day and 140 billion cubic meters of natural gas from the global market since bombings began on February 28. By comparison, the 1973 and 1979 oil shocks removed a combined 10 million barrels per day, while the 2022 Ukraine war disrupted roughly 75 billion cubic meters of gas.
At least 40 energy assets in the Gulf region have been severely or very severely damaged. The IEA reported that these infrastructure disruptions are compounding interruptions to the supply of petrochemicals, fertilizers, and helium.
In response to the blockade of the Strait of Hormuz, a waterway that facilitates 20 percent of the world’s oil trade, the IEA released 400 million barrels of oil from strategic reserves on March 11. Birol noted this action marked the largest emergency intervention in the agency’s history.
Trump had previously issued a 48-hour deadline, initially set to expire late Monday night, for Tehran to reopen the strait or face targeted destruction of its power grid. That ultimatum prompted Iranian officials to threaten retaliatory strikes on U.S. and allied desalination and energy infrastructure in the region.
Following the expiration of the initial deadline window and the subsequent announcement of the five-day military strike delay, global markets pivoted early Tuesday. Brent crude, the international benchmark, dropped by 10 percent to settle at $101 a barrel.