Global Economy Faces Challenges: IEA Chief Warns

WELLINGTON, Recent Zealand (AP) — The head of the International Energy Agency (IEA) warned Monday that the global economy faces a “major, major threat” due to the escalating conflict in Iran and the wider Middle East. Fatih Birol, the IEA’s executive director, stated that no country would be immune to the consequences if the current trajectory continues.

Birol addressed the Australian National Press Club in Canberra, detailing the impact of the crisis, which he assessed as exceeding the combined effects of the 1970s oil shocks and the disruptions to gas markets caused by the Russia-Ukraine war. His comments coincided with a new wave of Israeli attacks against Tehran and renewed Iranian strikes against neighboring Gulf states, alongside threats to target power plants.

According to Birol, approximately 40 energy assets across nine countries in the region have sustained damage, ranging from severe to very severe. The IEA is currently consulting with governments in Europe and Asia regarding potential releases from stockpiled oil reserves. “We will see, we will look at the markets,” Birol said. “If It’s necessary of course we will do it, but we will look at the conditions, we will analyze, assess the market and discuss with our member countries.”

The situation is further complicated by Iran’s influence over the Strait of Hormuz, a critical waterway for global oil transport. A past threat from former U.S. President Donald Trump, reported during the same period, involved a 48-hour deadline for Iran to open the Strait to all ships, with a warning of potential attacks on Iranian power plants if the demand was not met.

New Zealand participates in the International Energy Programme through representation on the IEA Governing Board, with a Wellington-based official attending 2-3 meetings annually. The country also maintains a part-time energy advisor based in Paris to monitor and report on Governing Board meetings and related committees.

The IEA, established to shape energy policies for a secure and sustainable future, has not issued a further statement following Birol’s remarks. Discussions regarding coordinated oil releases are ongoing among member countries.