Blitz Bureau
NEW DELHI: The world is facing a worse energy crisis than the twin oil shocks of the 1970s and the fallout of the Ukraine war combined, the head of the International Energy Agency (IEA) has warned, reports Al Jazeera.
Speaking at a media event in Australia last week, IEA Executive Director Fatih Birol said the energy crunch prompted by the US-Israel war on Iran exceeded the 1973 and 1979 oil shocks and gas shortages stemming from Russia’s 2022 invasion of Ukraine put together.
“This crisis, as things stand, is now two oil crises and one gas crash put all together,” Birol said in remarks to the National Press Club of Australia in Canberra.
Birol said the effective closure of the Strait of Hormuz and attacks on energy facilities had reduced global oil supplies by about 11 million barrels per day (bpd), more than double the combined shortfalls of the 1970s’ crises.
He said liquefied natural gas (LNG) supplies had been reduced by about 140 billion cubic metres, compared with a shortfall of 75bcm in the aftermath of Ukraine’s invasion by Russia.
At least 40 energy facilities across nine countries have also been severely damaged in the conflict, the IEA chief 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 said.
Birol also expressed concern that the scale of the crisis had previously not been fully understood, explaining his decision to speak publicly about the situation last week for the first time.
Last week, the Paris-based intergovernmental organisation, which earlier in March had announced plans to coordinate the release of 400 million barrels of oil from emergency stockpiles, proposed a series of measures governments could take to reduce energy consumption.
The proposed measures include facilitating more remote working and carpooling, and lowering speed limits on motorways.
“I thought the depth of the problem was not well appreciated by the decision-makers around the world,” Birol said.
The IEA chief said he was in consultation with different countries about releasing more strategic oil reserves if needed, but the “single most important solution” to the crisis was to unblock the strait, which usually carries about one-fifth of global oil and LNG supplies.
Oil prices have surged more than 50 per cent since the start of the war, which began with US-Israeli strikes on February 28, amid Iran’s effective blockade of the critical waterway.
Iran has threatened to completely close the waterway, which has been transited by a small number of vessels not aligned with the US or Israel, and launch attacks on energy and water infrastructure across the region if the US strikes its power plants.
The nine lives of crude
A spike in oil prices doesn’t stop at the fuel pump. It shows up in clothing, cosmetics, medicines and even everyday household items — often faster than consumers expect.
That’s because oil is not just an energy input. It is a core raw material across modern manufacturing, quietly embedded in thousands of products people use every day.
Even products that appear unrelated to energy rely on petroleum derivatives at some stage of production.
According to Mint, items such as chewing gum, toothpaste, deodorants, perfumes and cosmetics use oil-based compounds, from synthetic waxes and glycerin to fragrance chemicals.
Clothing is another major link. Materials like polyester, nylon and acrylic are derived from petrochemicals, making wardrobes indirectly tied to crude oil markets.
Plastics, used in packaging, toys, household goods and industrial components, further deepen this dependence. In some plastic-heavy products, petroleum content can account for a significant share of the material base, while in liquids like shampoos, it is relatively lower.
40 facilities damaged across 9 countries; major threat to global economy
Even pharmaceuticals are not insulated. Certain medicines depend on petrochemical inputs during manufacturing, extending oil’s reach into healthcare supply chains.
Since petroleum is a base input across multiple industries, higher oil prices raise manufacturing costs, squeeze margins and eventually push up prices for end consumers.
The broader relevance of this ‘hidden oil economy’ becomes sharper during periods of geopolitical stress.
What to watch next
If geopolitical tensions persist or supply routes face constraints, petrochemical costs could remain elevated. That would increase the likelihood of wider price pressures across consumer goods in the coming months.
Equally important is how quickly companies pass on these costs. Faster transmission could mean more immediate inflationary impact, while delayed pass-through may compress corporate margins before prices adjust.