Fatih Birol told Australia’s National Press Club the world is facing an unprecedented supply shock that threatens the global economy.

How bad is it?

The head of the International Energy Agency, Fatih Birol, warned in Canberra that the current energy squeeze is larger than the two oil shocks of the 1970s and the gas fallout after Russia invaded Ukraine in 2022, all added together. He spoke publicly about the scale of the problem only last week after concluding it had not been fully appreciated by decision makers.

Numbers that make you sit up

  • Oil supply loss: About 11 million barrels per day have been taken off the market because the Strait of Hormuz is effectively closed and energy facilities have been attacked.
  • LNG shortfall: Liquefied natural gas supplies have fallen by roughly 140 billion cubic metres, compared with a 75 billion cubic metre shortfall after the Ukraine conflict.
  • Damaged infrastructure: At least 40 energy facilities in nine countries have been severely damaged.

Why this is happening

Birol tied the crisis to the US-Israel military campaign against Iran. The confrontation has resulted in an effective blockade of the Strait of Hormuz, a waterway that normally carries about one fifth of global oil and LNG shipments, and direct attacks on energy targets.

What the IEA is doing and recommending

Earlier this month the Paris-based agency said it would coordinate the release of 400 million barrels from emergency stockpiles. It also proposed steps governments can take to cut energy use, such as encouraging remote work, promoting carpooling, and lowering motorway speed limits.

Birol said he is discussing additional releases from strategic reserves with countries if needed. Still, he called the single most important solution reopening the Strait of Hormuz so normal flows can resume.

Economic and geopolitical fallout

Oil prices have jumped more than 50 percent since the conflict escalated. The wider global economy, Birol warned, faces a major threat unless supply disruptions are resolved.

On the diplomatic and military front, the timeline is tense. The war, which began with US and Israeli strikes on February 28, has prompted a sharp diplomatic standoff. The United States issued Iran a 48 hour ultimatum to reopen the strait or face strikes on its power plants. Iran has said it may fully close the waterway and could attack energy and water infrastructure across the region if its power plants are hit.

Bottom line

This is not a normal price blip. The IEA sees a synchronized shock to oil and gas that outstrips historical disruptions. The quick reopening of the strait and coordinated policy moves to reduce demand and use strategic reserves are the immediate levers available to ease the crisis.