Fatih Birol, the head of the International Energy Agency, has said that increased oil production from Canada and Mexico can offer only limited relief to global energy markets disrupted by the Iran war. The IEA chief, speaking in Canberra, said that while higher North American output would help European markets, it could not adequately compensate for the massive shortfalls caused by the Hormuz strait’s closure. He described the overall crisis as equivalent to the combined force of the 1970s oil shocks and the Ukraine gas disruption.
The war in Iran began with US and Israeli strikes on February 28 and has since caused the loss of 11 million barrels of oil per day and 140 billion cubic metres of gas from global markets. These losses are more than double those of the combined 1970s oil crises and exceed the gas disruption caused by Russia’s invasion of Ukraine. At least 40 Gulf energy facilities have been severely damaged, meaning recovery will be slow even after peace is restored.
The IEA mobilized 400 million barrels of oil from strategic reserves on March 11, the largest emergency action in its history. Birol called on governments to adopt demand-reducing policies including remote working, lower speed limits, and reduced air travel. He confirmed the agency was in consultation with governments across Europe, Asia, and North America about whether further reserve releases would be necessary.
The Strait of Hormuz, the world’s most important oil shipping chokepoint, has been closed to commercial vessels, cutting about 20 percent of global oil supply from international markets. Asia-Pacific nations have been most severely affected, given their heavy dependence on Gulf imports. Japan indicated it could contribute minesweeping efforts to help reopen the strait if a ceasefire is agreed, while Australia, Japan, and South Korea faced criticism from President Trump for insufficient engagement.
Iran responded to Trump’s ultimatum by threatening to attack energy and desalination infrastructure associated with the US and its regional allies. Birol warned that hoarding fuel domestically was counterproductive and that no country would be shielded from the consequences of a prolonged crisis. The bottom line, he said, was that only the reopening of the Hormuz strait and genuine international cooperation could provide real and lasting relief.
