IEA chief Fatih Birol has warned that the Iran war has severely damaged over 40 energy assets across the Middle East, triggering the worst oil supply crisis in history.
International Energy Agency executive director Fatih Birol delivered a stark warning Monday from Australia’s national press club in Canberra: the ongoing war in the Middle East has inflicted “severely or very severely” damage on more than 40 energy assets spanning nine countries. Oil fields, refineries and pipelines lie crippled, meaning supply disruptions will linger long after any ceasefire.
“The situation is very severe,” Birol told the audience. “It will take some time to come back to the normal days we had before the war started.” The conflict has already stripped 11 million barrels per day of global oil supply – more than the combined losses of the two 1970s oil shocks. Gas markets have lost 140 billion cubic metres, nearly double the volume Europe shed after Russia invaded Ukraine.
Birol described the crisis as “two oil crises and one gas crisis put all together,” eclipsing every previous energy shock in modern history. The Strait of Hormuz – the chokepoint carrying roughly 20 per cent of the world’s oil – has effectively been shut down, cutting off vital flows of oil, fertiliser, petrochemicals and helium to Asia-Pacific economies. Even if peace arrives tomorrow, repair timelines for damaged infrastructure will prolong pain for months, possibly years.
IEA’s Bold Response to Supply Shock
The IEA has not stood idle, he said. On 11 March its member nations approved the largest-ever coordinated release of strategic oil reserves: 400 million barrels, or 20 per cent of total stocks. Prices fell briefly before rebounding. Now Birol is consulting governments in Asia and Europe about a second release “if necessary”.
“If it is necessary, of course we will do it,” he said. “We will look at the conditions, we will analyse, assess the market, discuss with our member countries.” There is no magic price trigger; decisions will be data-driven. Yet Birol was careful to manage expectations. “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.”
He urged demand-side measures proven during the 2022 energy crunch – lowering speed limits, encouraging work-from-home policies and smarter fuel rationing. “Each nation will need to decide how best to enact fuel savings,” he noted.
Asia-Pacific Bears the Brunt
Birol chose Canberra to launch a world tour precisely because the Asia-Pacific sits on the front line. The region’s heavy dependence on Hormuz shipments leaves it uniquely exposed. Australian Energy Minister Chris Bowen revealed six fuel shipments due mid-next month have already been cancelled or delayed, though importers have partially mitigated the gaps.
Prime Minister Anthony Albanese, after talks with Singapore’s Laurence Wong, issued a joint statement pledging deeper regional cooperation, faster renewable rollout and open trade in critical supplies. Birol praised Australia’s improved fuel stocks, calling its 30 days of diesel “a solid number” despite falling short of full IEA standards.
He warned that the depth of the crisis was initially underestimated by world leaders. Only after three weeks of fighting did he begin speaking publicly. “The depth of the problem was not well appreciated by the decision makers around the world,” he said.
Diplomacy and Conservation
For Birol the single most important solution is clear: reopen the Strait of Hormuz through adequate insurance, physical protection for shipping and diplomatic pressure. “The most important factor in ensuring a return to stable flows is the resumption of regular transit,” he stressed.
He also cautioned against knee-jerk policy mistakes. New taxes or charges on fuel risk scaring investors. “Energy investors are like butterflies: when they are scared, they fly away.” Instead, governments must offer predictable frameworks and ensure citizens – “the real owners of the resource endowment” – receive a fair share of profits. Birol expressed optimism that industry would support rather than exploit the crisis.
Long-Term Lessons for Energy Security
Beyond immediate firefighting, Birol used the platform to reinforce the IEA’s broader mission. Since becoming executive director in 2015 he has modernised the agency, expanding its mandate from oil to electricity, renewables and critical minerals while welcoming major emerging economies. Today the IEA represents over 80 per cent of global energy demand.
The current shock, he argued, underscores the urgency of accelerating the clean-energy transition, diversifying supply chains and building resilience. “The global economy is under major threat,” he implied in repeated references to the crisis’s historic scale.
After Canberra, Birol heads to Japan and then a G7 meeting. His message is consistent: act now on stocks and demand, push for Hormuz security, and treat this as a wake-up call for faster diversification and renewables.
The world has faced oil shocks before. This one, Birol made clear, is different – deeper, wider and more dangerous. How governments respond in the coming weeks will determine whether the pain remains temporary or becomes a lasting scar on the global economy.
Image: Wikimedia
