Global Oil and Gas Crisis Surpasses Historic Levels Amid Rising Tensions

The global energy market is currently experiencing a crisis that International Energy Agency (IEA) Executive Director Fatih Birol describes as more severe than the oil shocks of 1973 and 1979 and the 2022 gas shortages resulting from Russia’s invasion of Ukraine combined.

Speaking at the National Press Club in Canberra, Australia, on March 23, 2026, Birol stated that the current energy crunch, driven by the U.S.-Israel war on Iran, represents a major threat to the global economy.

Supply Disruptions and Infrastructure Damage

The crisis is centered on the effective closure of the Strait of Hormuz, a critical energy chokepoint. Under normal conditions, nearly 20% to 30% of global seaborne oil trade, approximately 20 million barrels per day, flows through this corridor between Iran and the Gulf states.

According to Birol, the closure of the Strait and targeted attacks on energy facilities have reduced global oil supplies by approximately 11 million barrels per day. This shortfall is more than double the combined deficits seen during the 1970s crises.

The impact extends to the natural gas sector, with liquefied natural gas (LNG) supplies reduced by about 140 billion cubic metres. For comparison, the shortfall following Russia’s 2022 invasion of Ukraine was 75 billion cubic metres.

the IEA chief reported that at least 40 energy facilities across nine different countries have suffered severe damage due to the conflict.

Surging Costs and Shipping Logistics

Geopolitical tensions involving the United States, Israel and Iran have created historic stress within oil supply chains. This has manifested in record-breaking tanker charter rates and surging crude prices.

Shipping 2 million barrels of crude oil from the U.S. Gulf Coast to China now costs more than $29 million, the highest rate ever recorded. Freight prices doubled within a two-week period, bringing shipping costs to nearly $14.50 per barrel.

These transport costs now account for approximately 20% of the West Texas Intermediate (WTI) crude oil price, which recently reached $79.47 per barrel. Other benchmarks have also risen, with Brent crude moving above $80 per barrel, while refined products such as heating oil and gasoline are increasing even more rapidly.

Some reports indicate that despite various maneuvers, crude oil has surpassed $100 a barrel in certain contexts, further pressuring consumers.

Market Reactions and Economic Impact

The combination of rising freight costs, OPEC+ production cuts, and geopolitical risk has created a fragile environment for global energy supplies. Asian buyers are currently attempting to secure crude supplies from the United States and other producers as tanker traffic slows and insurance costs rise due to the conflict in the Middle East.

The economic consequences are being felt by consumers, particularly in the U.S., where rising petrol costs are contributing to a building inflation shock.

This crisis, as things stand, is now two oil crises and one gas crash put all together,

Fatih Birol, IEA Executive Director

The IEA head emphasized the urgency of resolving the conflict to mitigate the threat to the global economy.