IEA warns Iran war oil crisis exceeds shocks of the 1970s

Tuesday 24 March 2026 - 15:20

By: Dakir Madiha

IEA warns Iran war oil crisis exceeds shocks of the 1970s

The global energy market is facing its most severe disruption in decades, with the International Energy Agency warning that the oil crisis triggered by the Iran conflict now surpasses the scale of the shocks seen in the 1970s.

Nearly a month after hostilities began on February 28, the closure of the Strait of Hormuz has sharply curtailed energy flows through one of the world’s most critical maritime routes. The passage, which once carried about 20 percent of global oil and liquefied natural gas supplies, has been reduced to minimal traffic as attacks on tankers and the withdrawal of insurance coverage have halted shipments.

According to the IEA, the conflict has removed around 11 million barrels per day from global oil supply. This exceeds the combined disruption of the two major oil crises of the 1970s, which together cut about 10 million barrels per day. The impact on natural gas is also severe, with disruptions estimated to be twice as large as those caused by the halt in Russian exports following the 2022 Ukraine war.

Major Gulf producers including Saudi Arabia, Kuwait, Iraq, and the United Arab Emirates have been forced to scale back production by roughly 10 million barrels per day due to export constraints and limited storage capacity. Iraq alone has reduced output by nearly 1.5 million barrels per day and could shut down most of its production if exports do not resume.

The economic impact is particularly acute in Asia. Japan relies on the Strait of Hormuz for about 90 percent of its oil imports, while South Korea depends on it for roughly 75 percent. China imports between 6.5 and 7.5 million barrels per day through the route, accounting for up to 45 percent of its total oil imports. Analysts warn that the crisis extends beyond oil, posing broader risks to gas supply and overall energy security in the region.

In response, IEA member countries agreed on March 11 to release a record 400 million barrels from strategic reserves, marking the largest coordinated release in history. While oil prices have eased slightly, they remain elevated, with Brent trading near 110 dollars per barrel, about 50 percent higher than before the conflict began.

Despite these measures, the outlook remains uncertain. IEA officials stressed that reopening the Strait of Hormuz is essential to restoring stability in global energy markets. Additional reserve releases remain an option, but may only provide temporary relief.

Diplomatic efforts have yet to produce clear results. The United States has extended its deadline for Iran to reopen the strait, while citing ongoing discussions. Iranian authorities have denied any negotiations and continue military operations in the region.

The scale of infrastructure damage is compounding the crisis. More than 40 energy facilities across the Middle East have been severely damaged, including major gas installations such as the Ras Laffan complex in Qatar, which accounts for a significant share of global liquefied natural gas supply.

IEA officials warned that even if hostilities end soon, restoring production and export capacity could take six months or longer, prolonging the disruption and its economic consequences worldwide.