International Energy Agency head Fatih Birol has doubled down on his forecast that the world is facing the biggest energy security threat in its history.
“As of today, we’ve lost 13 million barrels per day of oil . . . and there are major disruptions in vital commodities,” he told CNBC in Singapore on Thursday.
Mr Birol has previously warned that the Iran war and ongoing closure of the Strait of Hormuz would result in “the largest energy crisis we have ever faced.”
Sign up to The Nightly’s newsletters.
Get the first look at the digital newspaper, curated daily stories and breaking headlines delivered to your inbox.
By continuing you agree to our Terms and Privacy Policy.
“I expect, first of all, nuclear power, will get a boost . . . Renewables will grow very strongly — solar, wind and others — [and] I expect electric cars will benefit from this,” he noted. Alternative fossil fuels could also make a comeback, he noted.
“In some countries, I expect the coal may also see a push and go back up, especially in some big countries in Asia,” he said.
The vital maritime passage — through which an average 20 million barrels of oil and petroleum products were shipped every day before the war — is currently under a “double-blockade” with neither Iran nor the US allowing vessels to enter or exit the strait.
Describing the strait as one of the world’s “most critical oil transit chokepoints,” the IEA has warned the closure will affecet global economic growth, spur inflation and could lead to energy rationing. The agency has warned of an imminent jet fuel crunch in Europe, with some countries facing shortages within weeks.
“Europe gets about 75 per cent of its jet fuel from refineries in the Middle East and this is basically now [down to] zero . . . Europe is now trying to get it from the US and Nigeria,” Mr Birol said.
“If we are not able to get, in Europe, additional imports from the countries now, we will be in difficulties.
“I really hope, first of all, that the strait is opened and refinery exports start from there, but we may well need to take some measures in Europe to reduce air travel as well.”
The 32 member IEA has tried to mitigate the impact of the global energy supply disruption by agreeing in March to release 400 million barrels of oil from emergency stockpiles.
Mr Birol in early April said though the IEA would consider releasing a second tranche of reserves, such a move would represent a reprieve rather than a resolution to the crisis.
“This is only helping to reduce the pain, it will not be a cure,” he told the In Good Company podcast hosted by Nicolai Tangen, chief executive of Norges Bank Investment Management.
“The cure is opening up the Strait of Hormuz. We are gaining some time, but I don’t claim that this will be a solution, our stock release.”
Mr Birol urged governments to bolster their resilience with alternative energy sources, including nuclear, as well promoting more efficient technology, such as electric vehicles.
Mr Birol at the National Press Club in Canberra last month said Australia was one of the cornerstones for the region and the global energy market for LNG, coal and minerals and was confident in its positive trade relationships.
He has also urged Australia to use the energy crisis to speed up the pace of its transition.
