West Asia Conflict Hits 40+ Energy Assets
According to International Energy Agency Executive Director Fatih Birol, more than 40 energy assets across nine countries in West Asia have been “severely or very severely” damaged by the war in the region, which could potentially prolong disruptions to global supply chains even after the conflict concludes. “The damage means it will take some time for the oil fields, refineries and pipelines to come back online,” Birol said. Over three weeks of conflict in West Asia have disrupted the entire energy supply chain, effectively closing the crucial Strait of Hormuz and resulting in soaring prices for crude, natural gas, and fuel.
Birol stated that the impact of the current disruptions is comparable to the combined effects of the two significant oil crises in the 1970s and the 2022 natural gas crisis following Russia’s invasion of Ukraine. “Not only oil and gas, but some of the vital arteries of the global economy — such as petrochemicals, such as fertilisers, such as sulfur, such as helium — their trade is all interrupted, which will have serious consequences for the global economy,” he said. “Asia is at the forefront of this crisis, because of its heavy reliance on crude from the region,” Birol said. In response to China’s decision to limit fuel exports, he stated that it was essential for the entire world to confront the energy crisis collectively.
“Every country first looks at its own domestic interest, but in such a situation, to have serious export restrictions without justification, might not be something which gets plus points from the international community,” he stated. The IEA declared in early March its decision to release a historic 400 million barrels from its emergency oil reserves, aiming to alleviate supply shocks and mitigate price surges resulting from the conflict in West Asia. Last week, the Paris-based organization put forth measures aimed at assisting energy importers in reducing demand.
“Further oil reserves can be released as necessary if the Iran war further disrupts global energy markets over the coming days and weeks,” Birol said. “However, with shipping across the Strait of Hormuz at a near-halt, the only true solution to fuel supply disruptions is the reopening of the major trade route,” he said.
