IEA Chief: World faces worst energy crisis in decades

When I covered the Beirut port explosion in 2020, the energy infrastructure damage was catastrophic but localised. What Fatih Birol described to Australia's National Press Club on March 23 is something else entirely. The International Energy Agency's Executive Director flew to Canberra to deliver a message that defence planners and energy ministers across the Indo-Pacific have been dreading: the Strait of Hormuz closure has produced the largest supply disruption in the history of the global oil market.

"As of today, we lost 11 million barrels per day," Birol told the assembled press corps. "So more than two major oil shocks put together."

The arithmetic is worth pausing on. The 1973 Arab oil embargo cost global markets roughly 5 million barrels per day. The 1979 Iranian Revolution did the same. Each produced recessions across the Western world, queues at petrol stations, and political upheaval that shaped energy policy for a generation. The current crisis exceeds both events combined.

What 11 million barrels per day means

Birol outlined what the closure has interrupted: oil, liquefied natural gas, petrochemicals, fertilisers, sulphur, and helium. The strait handles roughly 20% of global petroleum trade. When Iranian forces moved to close the passage, they severed supply chains that feed manufacturing, agriculture, and transport systems across Asia.

"The single most important solution to this problem is opening the Hormuz Strait," Birol said. He made no predictions about when that might happen.

President Trump's 48-hour ultimatum to Tehran expired without the strait reopening. Iranian officials have threatened to strike Gulf neighbours' energy infrastructure and water desalination systems if military action follows. The IEA is now consulting with governments in Asia and Europe on releasing additional stockpiled oil, having already coordinated a record 400 million barrel release on March 11.

Australia's exposure

Six fuel ships bound for Australia from Malaysia, Singapore, and South Korea have been cancelled since the crisis began. Energy Minister Chris Bowen confirmed current reserves sit at 38 days of petrol and 30 days of diesel and jet fuel. The government has released 519 million litres from strategic reserves for regional Australia, where pump prices have hit $3.39 per litre in parts of NSW.

The two remaining domestic refineries, Ampol's Lytton facility and Viva Energy's Geelong plant, are running at full capacity. Together they produce roughly 20% of Australia's fuel needs. The rest arrives by tanker.

Malaysia has warned it will prioritise domestic fuel needs over exports. That statement, delivered by Kuala Lumpur's energy ministry earlier this week, signals what Australian officials privately fear: as regional supply tightens, countries with refining capacity will look after their own populations first.

"Late April and May shipments are expected to be more challenging," a Department of Climate Change, Energy, the Environment and Water briefing noted. Minister Bowen has not ruled out further measures.

Four energy crises compared

The IEA's demand-side recommendations

Birol confirmed the IEA has recommended member governments encourage working from home, limit air travel, and reduce driving speeds. These measures, familiar from the 1970s playbook, reflect the reality that supply-side solutions are limited. Canada and Mexico have both been approached about increasing production, though neither has the spare capacity to offset 11 million barrels.

Strategic reserves exist for precisely this scenario. The March 11 release, coordinated across IEA member nations, represented the largest such action in the organisation's history. Birol declined to specify what crude price level would trigger a second release, but confirmed discussions with Asian and European governments are ongoing.

What to watch

Three factors will determine how this crisis unfolds over the coming weeks.

First, whether the Trump administration's ultimatum escalates into military action. Iran has made clear it views any strike as cause to target Saudi, Emirati, and Qatari infrastructure. The Pentagon has moved additional carrier groups to the region, but a military reopening of the strait would likely damage the facilities on both sides that make it navigable.

Second, how quickly regional suppliers begin prioritising domestic needs. Malaysia's statement is the first explicit warning, but Indonesia, Vietnam, and Thailand all face similar calculations. Australia's fuel security depends on these countries continuing to export.

Third, whether the coordinated reserve release can bridge a gap until either the strait reopens or alternative supply chains establish. The IEA holds roughly 1.2 billion barrels in emergency stocks across member nations. At 11 million barrels per day of lost supply, that reserve lasts 109 days if no other supply materialises.

Birol's visit to Canberra was not ceremonial. The IEA does not send its executive director to deliver good news. What he brought instead was a warning calibrated for an Australian audience: the supply chains that deliver 80% of the country's fuel run through a waterway that is now closed, and the timeline for reopening depends on decisions being made in Tehran, Washington, and Beijing.

The 1970s crises reshaped Western energy policy for decades. The current disruption, at twice the scale, will likely do the same. Whether Australia emerges with diversified supply chains or exposed vulnerabilities depends on what happens in the next 60 days.