Just weeks before the Iran war erupted, global oil markets were sitting on a surplus — a cushion that has now entirely evaporated, replaced by acute shortages and economic anxiety, according to the head of the International Energy Agency. Fatih Birol said the speed and scale of the supply reversal has been extraordinary, with the conflict removing 11 million barrels of oil per day from global markets. He warned the crisis is now comparable in total force to the twin 1970s oil shocks and the gas crisis caused by Russia’s Ukraine invasion combined.
Birol made his remarks in Canberra, Australia, where he was meeting government officials including Prime Minister Anthony Albanese. He said the world began 2026 with oil markets in surplus, but strikes on Iran and attacks on vessels in the Strait of Hormuz rapidly changed the picture. The closure of the strait, through which about 20 percent of global oil flows, has been a central driver of the supply collapse.
The Iran crisis has also removed 140 billion cubic metres of natural gas from international markets, exceeding the 75 billion cubic metres lost when Russia invaded Ukraine in 2022. Gas supply is only part of a broader disruption: Birol warned that the conflict is also threatening supplies of petrochemicals, fertilizers, sulfur, and helium. These materials are critical to global food production and industrial activity.
The IEA authorized its largest ever emergency reserve release — 400 million barrels of oil — on March 11, along with calls for governments to adopt demand-cutting measures such as working from home and reducing highway speeds. Birol said the reserves would help stabilize markets but acknowledged that only around 20 percent of available stocks had been deployed so far. Further releases, he indicated, could follow if conditions worsened.
US President Trump’s ultimatum to Iran to reopen the Hormuz strait came with a threat to destroy Iranian energy infrastructure if the deadline passed without compliance. Iran threatened counter-strikes on US and allied energy and water facilities. Birol called for diplomatic resolution, warning that no economy in the world was insulated from the consequences of a prolonged energy crisis of this magnitude.