Oil and gas crisis from Iran war worse than 1973, ​1979 and 2022 together, says IEA | Oil

The current oil and gas crisis triggered by the blockade of the Strait of Hormuz is “more serious than those of 1973, 1979 and 2022 combined”, warned the head of the International Energy Agency (IEA), as the deadline set by Donald Trump for Iran to reopen the waterway approaches on Tuesday.

Fatih Birol, executive director of the IEA, told Le Figaro newspaper that the impact of the Middle East conflict on the oil market was greater than the combined force of the twin oil shocks of the 1970s and the fallout from Russia’s invasion of Ukraine.

Birol also warned that the countries most at risk were developing countries, which would suffer from rising oil and gas prices, rising food prices and a general acceleration in inflation, while European countries, Japan and Australia would also suffer.

Oil was trading above $110 a barrel on Tuesday, before falling into volatile trading, after Donald Trump said all of Iran could be “eliminated” overnight.

Brent crude, the international benchmark for oil prices, rose 1% to $111 a barrel, before falling back to $109.40 as traders monitored developments in the Middle East.

New York light crude rose 2.6% to $115.3 a barrel, before slipping to $112.72, up just 0.25%.

Investors are growing increasingly concerned as Trump steps up his threats against Iran, demanding that it reopen the Strait of Hormuz as part of any deal to end the war.

“Markets are jittery again as the U.S.-Iran conflict enters a critical phase, with investors effectively trading against another countdown set by the Trump administration,” said Daniela Hathorn, senior market analyst at Capital.com.

“The situation has evolved into a binary near-term outcome: either escalation via direct strikes on Iranian infrastructure, or a last-minute de-escalation that could trigger a sharp reversal in risk assets. For now, the lack of a clear path forward is keeping markets volatile and indecisive,” Hathorn added.

The US president, speaking to reporters at the White House on Monday, set a deadline of 8 p.m. ET on Tuesday (1 a.m. BST Wednesday) for Iran to reach a deal with Washington or face further attacks on civilian infrastructure, including power plants.

“The entire country could be destroyed in one night, and that night could be tomorrow night,” Trump said.

Trump said passage through the strait – a vital shipping channel through which a fifth of the world’s oil and gas supplies normally pass – was a “very high priority” and should be part of any ceasefire deal.

Asian stock markets were mixed on Tuesday, with Japan’s Nikkei flat and South Korea’s Kospi up 1.1%. Hong Kong’s Hang Seng fell 0.7%.

In Europe, Britain’s blue-chip FTSE 100 index plunged in early trading before turning positive, up 33 points or 0.3% by mid-morning to 10,467 points. France’s Cac 40 rose 1.2%, while Germany’s Dax 30 rose 0.7% after an early decline. The Stoxx Europe 600 index, which tracks the continent’s largest companies, gained 0.6%.

Markets have been choppy since the US-Israeli attack on Iran in February, with the effective closure of the Strait of Hormuz stoking inflation fears and shaking investor confidence.

On Monday, Kristalina Georgieva, head of the International Monetary Fund, warned that the war risked higher inflation and a slowdown in global growth.

Georgieva told Reuters that before the war began, the IMF expected a slight upward revision to its forecast for global growth of 3.3% in 2026 and 3.2% in 2027. Instead, she said, “all roads now lead to higher prices and slower growth.” The IMF is expected to release its report on the global economic outlook next week.

“We are in a world of high uncertainty,” Georgieva said, citing geopolitical tensions, climate shocks, demographic changes and technological advances. “All this means that once we recover from this shock, we will have to keep our eyes open for the next one. »

The war in Iran is also pushing the British economy towards stagflation, according to a survey of British corporate purchasing directors. Growth in the services sector was the weakest in 11 months in March, data provider S&P Global reported Tuesday, due to lower business and consumer spending sparked by concerns about the impact of the Middle East conflict.

“The inevitable conclusion from this morning’s final March PMI figures is that the UK is on the verge of another period of stagflation, even if the conflict ends soon. If the conflict continues, a recession seems likely,” said Thomas Pugh, chief economist at leading audit, tax and consultancy firm RSM UK.