Middle East war sparks historic global energy crisis

The ongoing war in the Middle East has triggered a severe disruption to the global energy system, forcing consumers worldwide to both pay higher prices and reduce consumption.

The effective closure of the Strait of Hormuz, a narrow channel along the Iranian coast, has halted the passage of 20% of the world’s oil and liquefied natural gas since the United States and Israel began airstrikes on Iran on February 28, Reuters reports. 

Meanwhile, continued attacks by Iran and Israel have targeted critical energy infrastructure in the region, including gas fields, oil refineries, and export terminals. Industry representatives warn that repairing the damage could take years.

The International Energy Agency has already described the situation as the worst global energy disruption in history, surpassing even the Arab oil embargo of 1973, which caused widespread fuel shortages and economic turmoil.

"You're not going to conserve your way around this. What it's going to translate to is price rises high enough that people stop consuming," said Dan Pickering, chief investment officer for Pickering Energy Partners.

So far, the crisis has removed approximately 400 million barrels — around four days of global supply — from the market, pushing prices up by roughly 50%.

Oil, gas, and their refined byproducts play a vital role across the modern economy, powering cars, trucks, planes, homes, and industries, as well as providing essential inputs for plastics and fertilizers.

"The breadth of what is at risk here in fuels, chemicals, LNG ⁠and fertilizer inputs is what makes this moment qualitatively different from previous episodes of Gulf tension," said Aditya Saraswat, senior vice president at consultancy Rystad Energy.

The surge in energy prices is also driving inflation, affecting consumers and businesses alike. The crisis has become a political challenge for U.S. President Donald Trump as he defends the war to the American public.

Trump has criticised NATO allies for their lack of support for the U.S.-Israeli military campaign against Iran, calling long-standing partners "cowards."

By Sabina Mammadli