Lead: International Energy Agency executive director Fatih Birol warned on Monday that the war involving Iran has created an energy shortfall larger than the combined 1973 and 1979 oil shocks plus losses from the Russia-Ukraine gas disruption, a development that has sent oil prices higher, roiled global stock markets and prompted emergency policy meetings in capitals including London.
Key Takeaways
- IEA estimate: the current crisis has removed about 11 million barrels per day of supply, exceeding the roughly 10 million b/d lost in the 1973 and 1979 oil shocks combined.
- Gas disruption: Birol said roughly 140 billion cubic metres (BCM) of gas supply has been lost so far, compared with about 75 BCM after Russia’s invasion of Ukraine.
- Strategic releases: IEA members agreed on 11 March to tap 400 million barrels from reserves, equal to roughly 20% of overall stocks; further releases are under consultation.
- Market moves: Brent traded near $112 a barrel while West Texas Intermediate hovered just below $100, and major Asian stock indices fell between 2% and 6% on renewed conflict fears.
- UK response: Prime Minister Keir Starmer will chair an emergency meeting Monday with Chancellor Rachel Reeves and Bank of England Governor Andrew Bailey to assess economic risks and energy security.
- Inflation risks: Some economists warn the energy shock could push UK inflation back toward 5% later this year absent targeted policy steps.
- Regional fallout: Saudi Arabia reported intercepting ballistic missiles and a drone near Riyadh, while Lebanon’s conflict toll reached 1,024 deaths and at least 2,786 wounded.
Background
The current escalation centres on the US-Israel campaign against Iran and reciprocal threats over the Strait of Hormuz, a narrow shipping route that carries a significant share of global oil and gas shipments. Energy flows through that corridor underpin markets for crude, refined products, fertilisers and industrial gases; disruptions reverberate quickly across commodity, currency and equity markets.
Global policymakers have some precedent for coordinated responses: in March IEA members authorised a record drawdown of strategic stocks equal to 400 million barrels to temper earlier price spikes. Still, Fatih Birol and others say the scale of simultaneous oil and gas interruptions — combined with supply-chain and petrochemical shocks — makes the present episode unusually complex compared with past crises.
Main Event
Fatih Birol spoke in Canberra on Monday and framed the situation in numerical terms, saying the world has lost about 11 million barrels per day as a result of conflict-related disruptions. He told reporters and officials that further consultations are underway with governments in Asia and Europe about potential additional releases from strategic stockpiles if markets so require.
Markets reacted immediately. Asian equities slumped: Shanghai fell about 2.5% at midday, Hong Kong’s Hang Seng dropped 3.5%, and Seoul and Tokyo experienced steeper intraday losses, in some cases approaching 6% and 5% respectively. Safe-haven flows and commodity-index adjustments pushed oil and energy-related sectors higher while broader cyclicals sold off.
Governments across the region are mobilising policy responses. The UK has called a Cobra-style meeting for Monday, chaired by Prime Minister Keir Starmer, to review economic and energy risks with senior ministers and the Bank of England. Indonesia is seeking up to 80 trillion rupiah (about $4.7bn) in savings and considering fuel-saving policies, while New Zealand will temporarily accept Australian-standard fuel to broaden import options.
Analysis & Implications
The immediate economic effect is a renewed energy-price shock that feeds into headline inflation and squeezes growth. For import-dependent economies, higher crude and refined-fuel prices raise transport and manufacturing costs and can depress consumption via cost-of-living pressures. In the UK, already-high inflation and stretched public finances make policymakers particularly sensitive to energy-driven price spikes.
Strategic stock releases can ease short-term dislocations but are not a structural fix. Birol himself noted stock draws provide market comfort but do not substitute for restored production and secure supply routes. If the Strait of Hormuz remains contested, shipping insurance costs, rerouting, and lower throughput at refineries will sustain volatility and raise the premium on energy security.
Beyond immediate markets, the crisis threatens downstream sectors such as petrochemicals and fertilisers, where feedstock shortages can ripple into agriculture and food prices. Those second-round effects increase the risk of stagflation in economies already wrestling with weak growth and high public debt in parts of Europe and Asia.
Comparison & Data
| Event | Estimated loss |
|---|---|
| 1973 + 1979 oil shocks (combined) | ~10 million barrels per day |
| Current Iran-related disruptions | ~11 million barrels per day |
| Gas market loss after Ukraine invasion | ~75 BCM |
| Current gas disruption estimate | ~140 BCM |
These figures encapsulate why the IEA describes the situation as deeper than familiar historical benchmarks. The table shows crude-output-equivalent impacts and gas-volume comparisons; while such aggregates mask regional variations, they illustrate the scale facing global energy balancing mechanisms and policy responders.
Reactions & Quotes
International and domestic leaders offered a mix of warnings and policy signals as markets reacted.
On the IEA response:
We will analyse market conditions and, if necessary, release more stocks to support supply,
Fatih Birol, IEA executive director
Birol’s remarks in Canberra emphasised consultation with member governments and a view that releases are a temporary stabiliser rather than a substitute for reopened supply routes.
On UK government action:
Leaders will discuss the need to reopen the Strait of Hormuz to resume global shipping,
UK government statement on Starmer-Trump call
The UK said Prime Minister Keir Starmer spoke with the US president and will host an emergency meeting with senior ministers to weigh economic and energy security measures.
On humanitarian impact and calls for de-escalation:
The death and suffering in the Middle East are a scandal for the whole human family; we must seek an immediate ceasefire,
Pope Leo, public address
The pontiff reiterated appeals for a halt to fighting as casualty reports continued to mount in Lebanon and across the region.
Unconfirmed
- Claims that a specific, identifiable price trigger would automatically prompt another coordinated stock release remain unconfirmed; IEA officials say no fixed price rule has been set.
- Attribution of a particular broadcast-station attack to a named external actor has been reported by state media but lacks independent verification in open-source reporting.
- Precise origins and scale of some reported missile and drone launches in the Gulf area are still being assessed by defence ministries and independent monitors.
Bottom Line
The IEA assessment places the current Iran-related energy shock above familiar historical comparators, underlining that markets and governments face a compounded oil and gas disruption. Short-term tools such as strategic stock releases can blunt immediate pain but will not replace secure supply routes or restored production capacity.
Policymakers must balance emergency fiscal and social measures for households with targeted support to sectors most exposed to energy cost shocks, while pursuing diplomatic and security steps to reduce transit risk in the Strait of Hormuz. Investors and businesses should prepare for sustained volatility in energy, commodity and shipping markets over the coming weeks.