Global energy markets are facing one of the most severe disruptions in decades, with the International Energy Agency (IEA) warning that the ongoing US-Israel-Iran conflict has already removed around 11 million barrels per day from global oil supply, an impact larger than past oil crises combined.
IEA Executive Director Fatih Birol told the National Press Club in Canberra, Australia, on Monday that the current disruption exceeds the combined supply losses of the 1973 and 1979 energy shocks.
On March 11, IEA member nations agreed to release a record 400 million barrels of oil from strategic reserves – about 20% of total stocks – to curb rising global crude prices. While the drawdown may ease market pressure, Birol emphasized that it is not a long-term solution. "The single most important solution is reopening the Strait of Hormuz," he said.
The Strait of Hormuz, through which roughly 20% of global oil shipments pass, has recently come under the spotlight after US President Donald Trump threatened strikes on Iran's power and energy facilities if it doesn't open the strait. Meanwhile, Iran has defied the threat and stressed that the strait is blocked only for "aggressors."
The latest Middle East tensions sent oil and gas prices swinging sharply on Monday. Brent crude briefly rose above $113 per barrel, a 50% gain since the conflict began, amid fears of a supply disruption as Trump's 48-hour ultimatum expired. Prices later dropped below $100 after Trump announced "very good and productive" talks with Iran and delayed strikes for five days, only to rebound again as Iran denied any negotiations.
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In an interview with CMG, Qin Tian, deputy director of the Institute of Middle East Studies of China Institutes of Contemporary International Relations, said this round of the energy crisis surpasses the oil crises of the last century in terms of scale, impact and nature.
During the oil crises of the 1970s, export losses were approximately 10 million barrels, whereas the current figure has reached 20 million barrels, a much larger absolute amount, Qin said, adding that the impact of the latest oil crisis on the global economy is more severe and the turbulence in the oil market has already spread to the entire commodity market.
Qin stated that the current crisis is essentially a military-influenced struggle over oil, making it far harder to resolve than previous crises.
Noting the military contest over the Strait of Hormuz is extremely intense and the strait has become a focal point of the current conflict, Qin noted two potential developments may unfold: one involves the struggle over energy and related infrastructure, which could lead the conflict to escalate from the military and energy sectors to a broader range of infrastructure.
As it's uncertain whether Trump's five-day delay on planned strikes came into effect or not, Qin cautioned that if the conflict becomes prolonged, it will have lasting and far-reaching negative impacts on regional security and the global economy.
In addition to putting a heavy burden on the US and Iran, Qin said the Gulf countries may suffer greater losses, with their energy and economic infrastructure facing further strikes, thereby weakening regional economic momentum.
Meanwhile, rising oil prices will drive up the prices of other commodities, increasing inflationary pressures worldwide and posing new challenges to global livelihoods and economic recovery, further straining an already fragile global economic growth outlook, Qin said.
