The Iran war has made the Middle East’s role in global energy supply more precarious than ever before, underlining the urgent need for the world to develop alternative supply sources and reduce its dependence on the region, the head of the International Energy Agency has said. Fatih Birol, speaking in Canberra, said the conflict had demonstrated that the Gulf region’s energy supply was more vulnerable to geopolitical disruption than even the most pessimistic risk assessments had suggested. He described the resulting crisis as equivalent to the combined force of the 1970s twin oil shocks and the Ukraine gas emergency.
Birol said the Middle East remained the world’s most important oil and gas producing region, accounting for a disproportionate share of global reserves and export capacity. But the concentration of so much of the world’s energy supply in a politically volatile region with a single critical transit chokepoint had created a structural vulnerability that the current crisis had explosively exposed. He said reducing this concentration was a global energy security priority that could no longer be deferred.
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. At least 40 Gulf energy assets have been severely damaged, and the Hormuz strait — through which approximately 20 percent of global oil flows — remains closed. The IEA deployed 400 million barrels from strategic reserves on March 11 in its largest emergency action.
Birol confirmed further releases were under consideration and said consultations with governments across three continents were ongoing. He called for demand-side policies including remote work, lower speed limits, and reduced commercial aviation. He met with Australian Prime Minister Anthony Albanese and said Australia, as a geopolitically stable major energy producer, had an opportunity to play a larger role in global energy supply diversification.
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 concluded that the Iran crisis should be the catalyst for the most ambitious global energy supply diversification effort since the 1973 oil shock. He said the world had been warned before — and now it had been shown — what the consequences of failing to diversify away from Gulf energy concentration truly looked like.
