The global economy faces a “major, major threat” due to the war in the Middle East, according to the head of the International Energy Agency. Fatih Birol warned world leaders initially underestimated the impact on energy prices, comparing the current crisis to the combined force of the 1970s oil shocks and the fallout from the war in Ukraine.
The conflict has already “severely” damaged over 40 energy assets across nine countries. Concerns are growing over potential disruptions to vital global economic arteries, including petrochemicals, fertilizers, sulfur, and helium.
Recent escalations, including Iran’s vows to attack energy infrastructure and threats regarding the Strait of Hormuz, could trigger the worst energy crisis ever seen. Birol highlighted the potential for compounding fallout from bombings and the closure of the strait.