The war in Iran is causing the biggest energy crisis of all time, according to the head of the International Energy Agency (IEA), Fatih Birol, who warned that it will take at least six months for oil and gas flows from the Gulf region to fully restore.
Birol noted that the disruption of natural gas flows is double that experienced in 2022 due to the Russian invasion of Ukraine. He also said that the loss of oil is even greater than the shocks of the 1970s, which caused recessions and fuel restrictions around the world.
Oil prices hit nearly $120 a barrel last week as Israel and Iran launched missile attacks on strategic energy hubs in the Persian Gulf, including the South Pars gas field and Qatar's massive Ras Laffan complex. Despite the tension, Birol said politicians and markets were still underestimating the scale of the crisis.
He stressed that the problem would grow as long as energy flows from the Middle East, which exports 20 percent of the world’s oil and liquefied natural gas, remain blocked. “People understand that this is a big challenge, but I’m not sure they fully understand the depth and consequences of the situation,” he said in an interview.
Even if the war ends and the Strait of Hormuz reopens, Birol noted that “it will take a long time” to restore oil and natural gas fields, many of which have been shut down or damaged. “It will take six months for some areas to reopen, while others will take much longer,” he said.
