The deepening Middle East war is now triggering what could become one of the most severe energy shocks in modern history, with global supply disruptions already exceeding past crises and raising fresh concerns over inflation, fuel prices and economic stability.
The head of the International Energy Agency (IEA) has warned that the ongoing Iran war could surpass the combined impact of the oil shocks of the 1970s and the disruption caused by Russia’s invasion of Ukraine.
Fatih Birol, executive director of the IEA, said the scale of the current crisis is unprecedented, with simultaneous disruptions in both oil and gas markets. “This crisis, as things stand now, is two oil crises and one gas crisis put all together,” he said.
According to the IEA, the ongoing conflict has already led to a loss of about 11 million barrels of oil per day, more than double the disruption seen during each of the 1973 and 1979 oil shocks. In addition, around 140 billion cubic metres of natural gas supply has been knocked out — nearly twice the impact of the Ukraine war.
The crisis was triggered by strikes on Iran beginning February 28 and has intensified with the closure of the Strait of Hormuz, a critical chokepoint through which roughly 20 percent of global oil supplies pass.
The closure of Hormuz has hit Asia-Pacific economies particularly hard, given their heavy reliance on Gulf energy supplies. Birol stressed that reopening the route remains the single most critical step to stabilise markets.
Despite efforts to boost production in countries such as Canada and Mexico, he warned that no economy would remain insulated if the crisis drags on. He said there were growing concerns that countries may begin hoarding fuel supplies — a move that could worsen volatility in international markets.
Birol said at least 40 major energy assets in the Gulf region have been severely damaged, suggesting that supply constraints could persist even if the conflict eases.
He also warned of broader disruptions to key industrial inputs such as petrochemicals, fertilisers, sulphur and helium — all vital to global manufacturing and agriculture — amplifying the economic fallout.
The agency has called for demand-side measures to ease pressure on energy markets, including:
Increased work-from-home arrangements
Temporary reduction in highway speed limits
Cuts in non-essential air travel
However, Birol cautioned that these steps would only “reduce the pain” rather than resolve the crisis.