International Energy Agency warns of an unprecedented energy crisis
Fatih Birol, the executive director of the International Energy Agency (IEA), announced the disastrous consequences facing the global energy sector as a result of the recent military escalation. Birol stated that he hopes the IEA will not have to implement another release from strategic oil reserves, but emphasized that the agency stands ready to act immediately if necessary to ensure the stability of global markets.
Extent of damage: More than 80 oil and gas facilities were damaged
In remarks delivered at an event organized by the Atlantic Council, Birol reiterated that the current conflict has caused the worst global energy disruption ever. He explained that more than 80 critical oil and gas facilities, including production plants, export terminals, and refineries across the Middle East, have been directly damaged by the war with Iran. Birol added bluntly, "I sincerely hope we will not have to use our strategic reserves again, but if necessary, we are prepared to act.".
Historical context and strategic importance of the Strait of Hormuz
Historically, the Middle East has been a major artery for global energy flows. The six-week-long war has inflicted widespread damage on the energy sector, deepening the global energy shock and taking approximately 10% of global crude oil production off the market. In this context, keeping the Strait of Hormuz open remains essential for any real market recovery, as roughly one-fifth of the world's daily oil consumption passes through this strategic waterway, and any closure would paralyze supplies to major markets in Asia and Europe.
Regional damage map: From Iran to the Arabian Gulf
Regionally, military strikes have targeted infrastructure in several countries. In Iran, attacks targeted fuel depots and oil refineries, causing widespread fires. In Qatar, the country lost approximately 17% of its liquefied natural gas exports after the vital Ras Laffan complex was damaged, and repairs and rehabilitation are expected to take three to five years, severely impacting global gas supplies.
The damage also extended to the United Arab Emirates, where the Ruwais refinery, with a production capacity of 922,000 barrels per day, was targeted, and operations at the Habshan gas processing plant were halted twice. In Kuwait, the Mina Al-Ahmadi and Mina Abdullah refineries sustained significant damage. In Bahrain, the Sitra refinery, with a capacity of 400,000 barrels per day, suffered structural damage that could take several months to repair.
Recovery efforts in Saudi Arabia
Faced with these challenges, Saudi Arabia is making concerted efforts to restore production stability. Despite losing 600,000 barrels per day of production capacity due to the attacks, the Saudi Ministry of Energy announced the successful restoration of approximately 300,000 barrels per day of production from the Manifa field. Meanwhile, work continues at full speed to restore an additional 300,000 barrels per day of lost capacity from the Khurais field.
Furthermore, the Kingdom was able to restore the full pumping capacity of the strategic (East-West) pipeline, which amounts to about 7 million barrels per day, after a temporary loss of 700,000 barrels per day for a brief period.
Expected impact on the global economy
Damage to oil and gas facilities on this scale not only affects producing countries but also the entire global economy. Large-scale production outages inevitably lead to sharp fluctuations in oil prices, driving up global inflation and increasing shipping and industrial production costs. The International Energy Agency plays a pivotal role in these crises by coordinating the release of strategic reserves—a measure used in previous crises, such as the 1991 Gulf War—to ensure that global supply chains do not collapse and to alleviate the burden on consumers.
