IEA Warning on Middle East Energy Market Risks

Global energy markets are under severe strain as disruptions in the Middle East intensify, with impacts now exceeding the combined severity of the oil shocks of the 1970s and the 2022 loss of Russian gas supplies, according to Fatih Birol, Executive director of the International Energy Agency.

“This crisis is worse than the two oil crises of the 1970s and the loss of russian gas in 2022 put together,” Birol said.

The assessment comes amid continued damage to energy infrastructure across the Middle East, where multiple facilities have been affected and operational capacity has been disrupted. “Some 40 key energy assets have been damaged in the Middle East,” he aded.

The fallout is already being felt in global supply balances, with significant volumes of crude removed from the market.

“More than 12 million barrels per day of oil supply has been lost so far due to the Middle East crisis. The biggest problem is the lack of jet fuel and diesel, already affecting Asia and expected to reach Europe in April–May,” he noted.

Further tightening is expected in the near term as supply losses deepen, with projections indicating a worsening situation in the coming weeks.

“Oil loss in April is expected to be twice as high as in March.”

In response to the evolving crisis, energy authorities are considering intervention measures, including the possible release of strategic reserves to stabilise markets if required.

“If we think there is a need for crude oil or products, we may intervene,” Birol said, referring to potential releases from strategic reserves.

Meanwhile, political tensions within Iran appear to be adding another layer of uncertainty to the broader crisis. Reports indicate growing friction between Iran’s civilian leadership and the Islamic Revolutionary Guard Corps (IRGC), with the latter allegedly asserting greater control over key state functions.

According to sources cited by Iran International, the IRGC has obstructed decisions taken by President Masoud Pezeshkian, including blocking his attempts to appoint a new intelligence minister. Several proposed candidates, including Hossein Dehghan, were reportedly rejected under pressure from IRGC chief Ahmad Vahidi, who argued that wartime conditions necessitate direct control by the Guard over critical leadership roles.

Security arrangements around Iran’s top leadership have also tightened, with a cordon reportedly established around Supreme Leader Mojtaba Khamenei. Communication between the presidency and the Supreme Leader has been limited, with repeated requests for meetings from Pezeshkian going unanswered. Questions around Khamenei’s health have further contributed to speculation about the country’s internal power structure.

At the same time, internal dynamics within the leadership circle are said to be under strain, with efforts reportedly underway to remove Ali Asghar Hejazi, a senior security official who has opposed the possible succession of Mojtaba Khamenei. Hejazi had previously warned that such a transition could concentrate power within the IRGC and weaken civilian institutions.

Earlier accounts had suggested Hejazi was targeted in an airstrike in Tehran during the early phase of the ongoing conflict, though he is believed to have survived.