IEA chief says current energy crisis worse than past oil shocks

ISTANBUL

The current global energy crisis is more severe than the oil shocks of 1973 and 1979 and the 2022 gas shortage linked to Russia’s war on Ukraine, the head of the International Energy Agency said Wednesday.

Speaking on a podcast, IEA Executive Director Fatih Birol said global supply losses now total about 12 million barrels per day, compared with about 5 million barrels per day during each of the 1973 and 1979 crises.

He added that while global gas supply fell by around 75 billion cubic meters in 2022, the current shortfall is even greater.

“April will be much worse than March,” Birol said, noting that some oil and liquefied natural gas shipments from the Middle East were still available last month. “But in April, there is nothing.”

Birol said the IEA has decided to release 400 million barrels from emergency oil reserves, calling it the largest such move ever.

“But I have to be very honest, this is only helping to reduce the pain. It will not set a cure,” he said. “The cure is opening up the Strait of Hormuz.”

He described the reopening of the strait as the single most important issue, saying current measures are only buying time.

The crisis has hit Asia hardest so far but is expected to spread to Europe and beyond, Birol said.

“The biggest problem today is the lack of jet fuel and diesel,” he said, adding that shortages are already evident in Asia and are likely to reach Europe in April or early May.

He said Asian buyers, unable to secure LNG from the Middle East, are turning to spot markets where Europe typically sources gas, driving up competition and prices.

“Since European electricity prices are based on the marginal cost of natural gas, electricity prices will go up,” he said.