World faces worst energy crisis since the 1970s

The world is facing an energy crisis worse than the combined effects of the 1970s oil crisis and the 2022 Ukraine war, said Fatih Birol, Executive Director of the International Energy Agency (IEA).

He made the remarks at a media event at the National Press Club in Canberra on Monday (March 23).

Fatih Birol said the current crisis is essentially a combination of two oil crises and a gas crisis. The virtual closure of the Strait of Hormuz and attacks on various energy facilities have reduced the supply of oil on the global market by about 11 million barrels per day. This is more than double the combined shortage of the crises of the 1970s.

At the same time, the supply of liquefied natural gas (LNG) has also decreased by about 140 billion cubic meters. However, this shortage was 75 billion cubic meters after the Russian attack on Ukraine. According to Birol, at least 40 energy facilities in nine countries have been severely damaged in the ongoing conflict.

He said, “The world economy is facing a huge threat today and I hope that this crisis will be resolved quickly.”

The IEA chief expressed concern that the depth of the crisis was not fully understood by many. That is why the IEA is explaining the situation publicly for the first time.

The Paris-based intergovernmental organization announced plans to release 400 million barrels of oil from its emergency reserves earlier this month. In addition, the organization has proposed several measures for governments to save energy. These include increasing remote employment (work from home) and carpooling facilities and reducing the speed limit on motorways.

The IEA chief said that the only effective solution to this crisis is to open the Strait of Hormuz, as this waterway transports about one-fifth of the world’s total oil and LNG.

Meanwhile, Iran-US-Israel tensions are intensifying. US President Donald Trump has given Iran a 48-hour ultimatum, and Iran has threatened to completely close the Strait of Hormuz if attacked. Currently, only certain countries' ships can navigate this vital waterway.