Brent crude oil surged past $108 a barrel Friday as the head of the International Energy Agency (IEA) warned the world may be facing its most severe energy crisis in history, triggered by escalating conflict in the Gulf region. The price increase represents a jump from $72 before the recent outbreak of hostilities.
Fatih Birol, the IEA’s executive director, told the Financial Times that restoring full oil and gas flows from the Gulf could take six months or longer, with some facilities potentially facing extended outages. He cautioned that politicians and markets are underestimating the scale of the disruption, estimating that roughly one-fifth of global oil and gas supplies are currently “effectively stranded” in the region.
The disruption stems from attacks on energy infrastructure, including Iranian drone attacks targeting facilities in Qatar and retaliatory strikes by the US and Israel on Iran. Qatar’s gas exports were halted at the beginning of the conflict, prompting Italy to seek alternative supplies from the United States, Azerbaijan, and Algeria, according to reports. Italy and the European Union have agreed to avoid resuming gas imports from Russia.
Birol likened the current situation to the oil shocks of the 1970s, stating that more oil has been lost than during those crises, which triggered recessions and fuel rationing globally. The volume of gas cut off by the fighting is twice as much as Europe lost from Russia following the invasion of Ukraine in 2022, he added.
In response to the crisis, the IEA has urged governments to implement immediate measures to reduce energy demand. These recommendations include encouraging remote work, reducing highway speed limits by at least 10 kilometers per hour, and promoting the use of public transportation. The agency also suggested alternating private car access to roads in large cities, increasing car sharing, and adopting efficient driving practices.
Further measures proposed by the IEA include diverting LPG use from transport, switching to electric cooking, leveraging flexibility with petrochemical feedstocks, and implementing short-term efficiency and maintenance measures within industry. The agency also advised against unnecessary air travel.
The IEA’s recommendations come as diesel prices hit €2.30 a liter in some European countries. The agency previously announced that governments had committed to releasing 271.7 million barrels of oil from strategic reserves to help stabilize markets, with supplies from Asia and Oceania already available and releases from Europe and the Americas expected by the conclude of March.
Birol emphasized the gravity of the situation, stating, “People understand that this is a major challenge, but I am not sure that the depth and the consequences of the situation are well understood.” He highlighted the potential for the problem to worsen with each day that energy flows from the Middle East remain disrupted by Iran’s influence over the Strait of Hormuz.
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