Global economy under 'major threat' from Strait of Hormuz crisis: IEA chief
"No country will be immune to the effects of this crisis if it continues to go in this direction. So there is a need for global efforts," said the International Energy Agency chief Fatih Birol.
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SYDNEY: The global economy is under "major threat" from the energy crisis caused by the Middle East war, International Energy Agency chief Fatih Birol said Monday (Mar 23).
Speaking at the National Press Club in Australia's capital, Birol described the crisis in the Middle East as "very severe" and worse than the two oil shocks of the 1970s, as well as the impact of the Russia-Ukraine war on gas, put together.
"This crisis, as things stand, is now two oil crises and one gas crash put all together," he said.
"The global economy is facing a major, major threat today, and I very much hope that this issue will be resolved as soon as possible," Birol added.
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"No country will be immune to the effects of this crisis if it continues to go in this direction. So there is a need for global efforts."
US President Donald Trump and Tehran have issued tit-for-tat threats as the war entered its fourth week, with the US president demanding the Islamic Republic reopen the blocked Strait of Hormuz, through which around 20 per cent of the world's oil and gas shipments transit.
The bottleneck has nearly halted all petroleum shipments through the narrow waterway, and oil prices have spiked.
IEA is consulting with governments in Asia and Europe on the release of more stockpiled oil "if necessary" due to the Iran war, Birol said.
"If it is necessary, of course, we will do it. We look at the conditions, we will analyse, assess the markets and discuss with our member countries," he added.
IEA member nations agreed on Mar 11 to release a record 400 million barrels of oil from strategic stockpiles to combat the spike in global crude prices. The drawdown represented 20 per cent of overall stocks.
There would not be a specific crude price level to trigger another release, Birol said.
“A stock release will help to comfort the markets, but this is not the solution. It will only help to reduce the pain in the economy,”he added.
The IEA chief began his world tour in Canberra as the Asia Pacific is at the forefront of the oil crisis, he said, given its reliance on oil and other crucial products like fertiliser and helium transiting the Strait of Hormuz.
After meeting Australian Prime Minister Anthony Albanese, Birol will travel to Japan later this week before a Group of Seven meeting.
Stockpile drawdowns are only a portion of what the IEA could do, he said.
Measures outlined by the IEA, such as lowering speed limits or implementing work-from-home measures, had reduced energy use when implemented in Europe in 2022, but each nation would need to decide how best to enact fuel savings, Birol said.
He said that while Australia’s liquid fuel holdings were lower than IEA regulations, the current government had done much to improve them and that 30 days of diesel was a “solid number”.
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