Even if a ceasefire in the Iran war were achieved tomorrow, global energy markets would remain in crisis for months due to the extensive damage sustained by Gulf energy infrastructure, the head of the International Energy Agency has warned. Fatih Birol, speaking in Canberra, said at least 40 major energy assets in the Gulf region had been severely or very severely damaged, making a rapid supply recovery impossible regardless of when hostilities end. He described the overall crisis as equivalent to the combined force of the 1970s twin oil shocks and the Ukraine gas emergency.
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. The Strait of Hormuz has also been closed to commercial shipping, cutting off approximately 20 percent of global oil supply. Even with a ceasefire and a reopening of the strait, the damaged energy infrastructure would take considerable time to repair and bring back online.
The IEA released 400 million barrels from strategic petroleum reserves on March 11 — the largest emergency action in its history — and called for demand-side policies including remote work, lower speed limits, and reduced commercial aviation. Birol confirmed further releases were under consideration, noting only 20 percent of available stocks had been deployed. He said the IEA’s emergency mechanisms were designed exactly for this kind of situation.
Asia-Pacific nations have been most severely affected by the Hormuz closure, with Japan indicating potential willingness to contribute minesweeping military assets if a ceasefire is reached. European markets have also seen tightening diesel and jet fuel supplies. Birol said Canadian and Mexican oil output could offer some partial relief to European markets, but the overall global supply gap was enormous.
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 met with Australian Prime Minister Anthony Albanese and urged sustained international engagement for what would clearly be a prolonged recovery. He warned governments to plan not for a quick return to normality but for an extended period of constrained energy supply.