The head of the International Energy Agency (IEA), Fatih Birol, anticipates that the repercussions of the Iran conflict will remain noticeable for an extended period. While he welcomed the announcement of a two-week ceasefire in the Middle East as a positive development, he stressed that the most crucial factor for easing pressure on energy supplies, prices, and the global economy is the resumption of trade through the Strait of Hormuz.
However, Birol does not expect the energy policy fallout to resolve quickly. He stated that it will take time for shut-down facilities to safely resume operations, and similarly, tankers leaving the Gulf region will require time to reach their destination markets. While South Asia might see deliveries within a few days, more distant Asian and European markets could face delays spanning several weeks. He added that although Europe might manage through April without major issues if the Strait remains partially open, things would become significantly harder afterwards, particularly concerning diesel and kerosene.
He predicted that if the Strait remains closed past mid-May, restrictions on air traffic could occur. The IEA chief expressed his hope that the Strait of Hormuz will be fully open by the end of April, warning that any prolonged closure would lead to more severe consequences and make returning to pre-conflict conditions extremely difficult, pointing out that many energy infrastructures are damaged and require considerable time to repair. Birol concluded that the energy supply consequences will be felt, if not for years.
Regarding pricing, Birol argued against implementing a cap on gasoline prices. He suggested that the most appropriate method for supporting vulnerable population groups financially would be targeted assistance, rather than indiscriminate price cuts. He noted that whether people are rich or poor, they all consume the same gasoline and electricity; therefore, targeted support focused on lower incomes is more effective and should only be temporary. Furthermore, if the energy crisis persists, Birol anticipates that Germany may face speed limits on its highways. Addressing a separate issue, he labeled Germany’s phase-out of nuclear power as a “historical mistake” arguing that it negatively impacted the economy, emissions, and sovereignty, and that the country’s vulnerability would be lower today had the government not shut down the nuclear power plants.
