The current energy crisis is worse than the oil and gas crises of 1973, 1979, and 2022 taken together, as we are witnessing an unprecedented supply shock from the key exporting region, the Middle East, according to Fatih Birol, the executive director of the International Energy Agency (IEA).
“The world has never experienced disruption to energy supply of such magnitude,” Birol told French newspaper Le Figaro in an interview published on Tuesday.
The ongoing crisis with the blocked Strait of Hormuz is “more serious than the ones in 1973, 1979 and 2022 together,” the head of the IEA added.
Developed economies will suffer from higher inflation and supply disruptions, but developing economies and emerging markets face even greater risks from sky-high energy and food prices, according to Birol.
The IEA last month launched the biggest-ever coordinated release of oil stocks to plug in the gap that opened due to the halted supply at Hormuz. It is now coordinating the biggest emergency release of oil stocks since it was created in the 1970s during the Arab oil embargo.
The IEA has signaled it could resort to another release of stocks, although the current release of 400 million barrels is still being processed and worked through by the participating countries, with actual supply just now starting to move to the market.
The agency warned in its monthly report in March that the Middle East war is creating the biggest supply disruption in the history of the oil market as flows of about 20 million barrels per day of crude and products through the Strait of Hormuz have crashed to a trickle.
With traffic largely halted, limited capacity to bypass the crucial waterway, and storage filling up, Gulf countries have cut total oil production by more than 11 million barrels per day (bpd), the IEA says, noting that “In the absence of a rapid resumption of shipping flows, supply losses are set to increase.”
By Michael Kern for Oilprice.com
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