Global Energy Crisis Surpasses Past Oil Shocks, IEA Warns

Agadir – The head of the International Energy Agency (IEA) has warned that the world is facing an energy crisis that is more severe than the oil shocks of the 1970s and Russia-Ukraine war fallout combined.

“This crisis, as things stand, is now two oil crises and one gas crash put all together,” IEA Executive Director Fatih Birol told the National Press Club in Canberra on Monday.

The war has already caused a loss of 11 million barrels daily from the global oil market, more than double the amount lost during the 1973 and 1979 oil price shocks, he explained. 

Meanwhile, the amount of liquefied natural gas (LNG) lost from the market is 140 billion cubic meters, far above the 75 billion cubic meters lost from the market following the Russian invasion of Ukraine in 2022.

The war has severely damaged at least 40 energy facilities across nine countries, he revealed, warning: “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.” 

Read also: IEA Orders Record Release of Emergency Oil Reserves to Curb Surging Prices

This increasingly deepening and alarming disruption of the global energy market is largely due to the closure of the Strait of Hormuz, a vital waterway that normally facilitates the transportation of one-fifth of global oil and LNG supplies. 

Birol emphasized that access to the strait needs to be restored as a matter of urgency. “The single most important solution to this problem is opening the Hormuz Strait,” he said. 

As a response to the crisis, IEA countries agreed earlier this month to release a record 400 million barrels of oil from their emergency reserves, or 20 percent of total reserves, to stabilize oil markets.

The IEA chief signaled the possibility for more releases from their oil reserves if the crisis continues. “If it is necessary, of course, we will do it. We look at the conditions, we will analyse, assess the markets and discuss with our member countries,” Birol said.

Yet he pointed out that such measures can only provide temporary relief, stressing: “A stock release will help to comfort the markets, but this is not the solution. It will only help to reduce the pain in the economy.” 

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