In a stark warning, Fatih Birol, the Executive Director of the International Energy Agency, revealed the depth of the global energy crisis that began about three weeks ago, stating that the current situation is "very dangerous" and surpasses the impacts experienced during the oil crises of the 1970s.
Birol, speaking in an interview with a newspaper in Australia, noted that humanity has lost about 11 million barrels of oil per day so far, exceeding the record loss of 10 million barrels during the crises of 1973 and 1979.
Details of the Current Crisis
Birol explained that the current energy crisis also affects gas markets, with Europe losing around 75 billion cubic meters of gas, which has doubled to approximately 140 billion cubic meters due to recent events.
He confirmed that the impacts extend beyond oil and gas to include essential supply chains such as petrochemicals, sulfur, and helium, with these supplies beginning to be disrupted, negatively affecting the global economy.
Background & Context
Birol believes that a lack of clear understanding of the magnitude of this problem contributes to the worsening situation, calling for decisive actions to address current challenges. In response, the International Energy Agency released about 400 million barrels from reserves on March 11, a decision he described as a "historic achievement."
This decision came after broad consensus among member countries and effectively contributed to reducing prices by $18 per barrel, but prices have risen again due to ongoing turmoil in the region.
Impact & Consequences
Birol noted that any increase in production comes after consultations with member countries, aiming to achieve balance in global markets. In his statements, he emphasized that price reductions have instilled a certain level of confidence in the markets, stressing that a specific price level cannot be determined, as decisions depend on a careful analysis of current market conditions.
He also pointed out that the only radical solution available now is to reopen the Strait of Hormuz, which represents a vital corridor for global energy supplies, emphasizing that his role as the head of the agency does not involve political or military statements but focuses solely on the economic aspects related to energy.
Regional Significance
Asia is severely affected by this situation, especially in oil products such as diesel and jet fuel, while some countries have begun relying on their reserves to avoid shortages. In this context, actions by some countries like Canada, which has postponed maintenance work to increase production, and Mexico, which is seeking to boost its exports, reflect the increasing pressures on supply levels.
Australia, which stands out as one of the largest exporters of liquefied natural gas, has emphasized its need to strengthen its reserves in case the crisis continues, despite having played an important role in ensuring energy security in its region.
Consequently, these events indicate that many countries may resort to unconventional methods such as coal to compensate for any anticipated supply shortages, opening the door to further economic and environmental complexities.