Fatih Birol, the head of the International Energy Agency (IEA), has said that if the conflict in the Middle East and the closure of the Strait of Hormuz continue, countries will suffer.
Birol also told countries to be ready for “difficult times in the energy market,” saying that no country is safe from the war’s effects.
The head of the IEA spoke at a meeting with the IMF and WBG on Monday. This meeting was part of the ongoing IMF-WBG spring meetings in Washington, DC.
The meeting, which looked at how the war affected the global economy, is said to be part of the coordination group they set up in early April to make sure their institutions were doing everything they could to deal with the war’s effects on energy and the economy.
Birol’s warning comes after the US and Iran’s peace talks in Pakistan ended without a deal.
President Donald Trump had said that the US Navy would start blocking ships from entering or leaving the Strait of Hormuz because the peace talks had failed.
“The world is facing the biggest threat to energy security in history.” Birol said, “It’s oil, it’s natural gas, but it’s also other important goods like fertilizers, petrochemicals, helium, and more.”
“The problem is very big, and some countries will be hurt more than others, but I can tell you that no country is safe from it.”
Birol said that March was a very hard month for the world in terms of energy and the economy, and he warned that April might be worse.
He said, “Because we have already received cargoes that were loaded before the crisis started to the markets in March, and nothing has been loaded in April.”
“The longer the problem lasts, the worse it gets.”
He said that the IEA is keeping an eye on more than 80 energy facilities in the area, such as oil fields, gas fields, refineries, and terminals. This is because production plants are still being targeted.
The expert said that one-third of the damage to the facilities is “severe or severely damaged.” He also said that it would take a long time to get back to the level before the conflict started, even after the problem is over.
He said, “We should be ready for some tough times in the energy markets, the economy, and especially for those developing countries that import oil and gas and have weaker muscles than the rest.”
He said that IEA member countries have released 400 million barrels of oil, which is the most ever, and “it is hitting the markets.”
Birol said that prices went down by “almost $20” when he announced the release in March.
“It’s good, but this isn’t the answer. “This is only making the pain less,” he said.
The head of the IEA said that the answer is still to fully open the Straits of Hormuz to trade.
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