The Iran energy crisis is teaching the world some of the hardest and most expensive lessons in history about the true cost of energy dependence on politically unstable regions and vulnerable transit routes, the head of the International Energy Agency has said. Fatih Birol, speaking in Canberra, said the economic damage being inflicted by the crisis — equivalent in force to the combined 1970s twin oil shocks and the Ukraine gas emergency — was the real price of decades of inadequate investment in energy supply diversification and resilience. He called on governments to ensure the lesson was learned and acted upon.
Birol said the cost of energy dependence was not normally visible during periods of stable supply — it was hidden in the implicit risk premium that came with relying on single sources and single transit routes. The Iran crisis had made that hidden cost explicitly and catastrophically visible. He said the economic damage now being experienced should be understood as the payment of a debt that had been accumulating for decades.
The conflict began February 28 with US and Israeli strikes on Iran and has since removed 11 million barrels of oil per day and 140 billion cubic metres of gas from world markets. At least 40 Gulf energy assets have been severely damaged, and the Hormuz strait — through which approximately 20 percent of global oil flows — remains closed. The IEA deployed 400 million barrels from strategic reserves on March 11 in its largest emergency action.
Birol confirmed further releases were under consideration and said consultations with governments across three continents were ongoing. He called for demand-side policies including remote work, lower speed limits, and reduced commercial aviation. He met with Australian Prime Minister Anthony Albanese and said the lesson about energy dependence costs was one that Australia’s historically stable and diversified energy position had fortunately moderated, but not eliminated.
Trump’s 48-hour ultimatum to Iran to reopen the strait expired without result, and Tehran threatened retaliatory strikes on US and allied energy and water infrastructure. Birol concluded that the true cost of energy dependence — now being paid in full and with devastating interest by the global economy — was the most powerful possible argument for the investments in diversification and resilience that the world should have been making for the past fifty years. He said it was not too late to start making them — but every day of delay added to the total cost.