The president of the International Energy Agency (IEA), Fatih Birol, has warned that the current energy crisis is among the worst in recent decades. The consequences on the economy, according to Birol, will reach all countries in the world and no one can be said to be excluded.
Trump’s strategies to reduce the impact of the bombings on Iran and the resulting retaliation on the Gulf countries do not appear to have had an effect. The price of oil continues to rise, at times exceeding $110 a barrel, and Tehran shows no signs of wanting to guarantee safe passage through the Strait of Hormuz.
The IEA warning on the energy crisis
In a series of statements released to the press, IEA President Fatih Birol described the current energy crisis caused by the war in the Middle East in a very pessimistic manner.
The global economy is facing a very serious threat today and I sincerely hope that this problem will be resolved as soon as possible. No country will be immune to the effects of this crisis if it continues to go in this direction. Therefore, a global effort is needed.
The IEA has calculated that at least 40 energy plants in the Middle East have been damaged by the US and Israeli attacks on Iran and by Tehran’s retaliation against the Gulf countries allied with the United States. The situation has also worsened due to the closure of the Strait of Hormuz, which connects the Persian Gulf to the Indian Ocean and through which 20% of global oil passes.
11 million barrels per day disappeared
Birol described the current crisis by comparing it with those of the 1970s, the most serious of the last century:
Many of us remember the two consecutive oil crises of the 1970s. Over that period, in each of the crises, the world lost about five million barrels a day, and in both together, 10 million barrels a day. To date, we have lost 11 million barrels per day, more than two major oil shocks combined.
The comparison may be impressive, but it must be put into context. Today, between 102 and 106 million barrels of oil are consumed worldwide, according to OPEC estimates. This crisis has therefore reduced supply by around 9% of demand. By the end of the 1970s, during the peak consumption of that decade, the world was demanding 60 million barrels a day. In that case, therefore, a reduction of 5 million barrels represented an 8.3% drop in supply relative to demand.
Birol’s words could imply that the current crisis is as serious as those of the 1970s combined. In reality it is only slightly more impactful on the oil market. Furthermore, the world is less dependent on oil today than 50 years ago, thanks to the development of other energy sources. This could make the impact of this crisis on the global economy less severe.
The effects on the world economy and on Italy
This does not mean that, if the war in the Middle East were to prolong, several countries would have to find alternative solutions to supply themselves with oil and gas. Italy is particularly exposed in this sense, both because it imports a lot of gas from Qatar, one of the countries affected by the war, and because methane determines the price of energy in Italy for 89% of hours of consumption.
Consequently, any increase in the price of gas on international markets is a danger for our country’s economy. The Government is taking action to increase imports from Algeria, but not to quickly develop an alternative to gas other than coal, as recently proposed by the Minister of the Environment Gilberto Pichetto-Fratin in an interview given to The Press.
