An unprecedented serious situation in history: A combination of two oil crises and one gas crisis is impacting the entire world

Fatih Birol, Executive Director of the International Energy Agency (IEA), warns that no country will be able to escape the worst energy crisis the world has faced in decades. He made this statement today while addressing the National Press Club in Canberra, Australia.

The escalating war in Iran in late February and the resulting blockage of the Strait of Hormuz, through which about twenty percent of the global oil supply passes, have been the main reasons for this situation. He points out that this is a much more serious situation than the oil crisis of the 1970s.

Further commenting, Fatih Birol stated that many of us remember the two oil crises of the 1970s, during which the world lost 5 million barrels of oil per day. However, he said that today, 11 million barrels of oil per day are being lost to the world, making this a more severe situation than the two major oil crises combined. He explained that the current crisis is a combination of two oil crises and one gas crisis, and strongly emphasized the need for a concerted global action, as no country will be able to escape its impact if this situation continues.

The head of the International Energy Agency stated that the global economy is currently facing a massive threat, and he strongly hopes that this problem will be resolved as soon as possible. He also confirmed that the only and most important solution to this massive problem is the reopening of the Strait of Hormuz. Currently, more than 40 energy infrastructure facilities, including oil fields, refineries, and pipelines belonging to nine countries in the Middle East, have been severely damaged, and it is estimated that it will take months or even years to restore these facilities, which are burning due to aerial attacks, even after the war ends.

In response to this emergency, member countries of the International Energy Agency have already released a record 400 million barrels of oil from their strategic reserves to the market. This represents about twenty percent of their total reserves. It is reported that discussions are currently underway with Asian and European governments regarding the release of further oil reserves if needed. However, Mr. Birol further clarified that while the release of reserves provides some relief to the market, it is not a permanent solution and only alleviates the economic pain to some extent.

This crisis has directly affected countries like Sri Lanka, which are entirely dependent on crude oil from the Middle East via the Strait of Hormuz. Fuel prices in Sri Lanka have already increased by about 25 percent, and according to some reports, the price of a liter of petrol has exceeded the Rs. 398 mark. To conserve fuel, the number of working days for the public sector has been reduced to four per week, and Wednesday has been declared a government holiday. President Anura Kumara Dissanayake has also warned that the nation must prepare for a long-term Middle East crisis. As Sri Lanka was recovering from the economic downturn of 2022, this crisis has created a risk of severe impact on inflation, transportation, power, and agricultural sectors due to the need to cover an additional import bill of billions.