The Iran energy crisis is putting at risk the global economic recovery that had been underway following the COVID pandemic and previous supply disruptions, the head of the International Energy Agency has warned. Fatih Birol, speaking in Canberra, said the supply shock — equivalent in force to the combined 1970s twin oil shocks and the Ukraine gas emergency — was adding enormous new pressures to economies that had already been working to rebuild their resilience. He called for urgent international action to prevent the crisis from derailing progress that had taken years to achieve.
Birol noted that many economies around the world had only recently stabilized after the inflationary shocks caused by the COVID supply chain disruptions and the Ukraine conflict. The Iran crisis was now adding a new and far larger supply shock on top of those still-healing wounds. He said the cumulative effect of multiple consecutive supply disruptions could prove more economically damaging than any single crisis would be in isolation.
The conflict began February 28 with US and Israeli strikes on Iran and has since removed 11 million barrels of oil per day and 140 billion cubic metres of gas from world markets. At least 40 Gulf energy assets have been severely damaged, and the Hormuz strait — through which approximately 20 percent of global oil flows — remains closed. The IEA deployed 400 million barrels from strategic reserves on March 11 in its largest emergency action.
Birol confirmed further releases were under consideration and said the IEA was consulting with governments across Europe, Asia, and North America. He called for demand-side policies including remote work, lower speed limits, and reduced commercial aviation. He met with Australian Prime Minister Anthony Albanese and expressed concern about the crisis’s potential to undermine Australia’s own economic recovery trajectory.
Trump’s 48-hour ultimatum to Iran to reopen the strait expired without result, and Tehran threatened retaliatory strikes on US and allied energy and water infrastructure. Birol concluded by urging governments to treat the protection of economic recovery as a shared priority alongside energy supply stabilization. He said the international community could not afford to allow the Iran crisis to undo the years of effort that had gone into rebuilding economic stability after the shocks of the early 2020s.
