Chief of the International Energy Agency (IEA) announced that 40 major energy assets across the Middle East have been severely damaged during a conference in Australia this Monday. He warned that this situation, a product of the ongoing Iran war, poses a great danger to the global economy.
The executive director of the IEA, Fatih Birol, issued a grave warning for the global economy this Monday as the Iran war continues to disrupt international energy markets. During a speech at the National Press Club in Canberra, Australia, Birol stated that 40 major energy assets across the Middle East have suffered extensive damage. These consist of oil and gas fields, refineries, pipelines, and more across nine different countries in the region.
This news adds a new layer to the ongoing international oil crisis after Iran’s forced closure of the Strait of Hormuz in retaliation for the U.S. invasion. Birol believes that the conflict between the two nations is creating a global energy crisis worse than those seen in 1970 and 2022 combined. He urged a global effort to resolve this war as soon as possible, as no country will be immune to the economic shock if it continues at this rate.
Why are energy assets being targeted?
The destruction of various energy assets across the Middle East is part of a broader escalation of the war between Iran, the U.S., and its involved allies. Energy infrastructure has become a key target for both sides in this conflict as an attempt to exert economic pressure. This strategy can also be seen in application with the Iranian closure of the Strait of Hormuz, which controls the passage of roughly a fifth of the world’s oil supply.
However, the destruction and disruption of global oil infrastructure could escalate into a wider energy crisis in the region if the war continues to escalate. U.S. President Donald Trump threatened to bomb Iranian power plants on Saturday if the Iranian government did not reopen the Strait of Hormuz by this Monday.
The Iranian government responded to this threat by vowing to destroy all U.S. and Israeli-owned energy, information technology, and desalination infrastructure in the region if attacks were carried out.
How global markets are responding to the escalation
The Iran war has had a rough impact on the global economy as the conflict enters its fourth week. Since it began on February 28th, oil prices have risen between 40-60% globally. Before the war, oil prices were around $70 a barrel. It has since climbed to over $100, even peaking at $115 during periods of high escalation and uncertainty. There have been pullbacks along the way, but overall, consumers globally have seen a significant rise in gas prices in just a short period of time.
The price of gold, which is typically considered a safe-haven asset during times of global uncertainty, has actually declined in value by 15-18% since the start of the war. Equity markets have also been suffering, with the S&P 500 down roughly 5% in the same time frame.
Cryptocurrency markets, on the other hand, have shown incredible resilience during this period of global uncertainty. Despite initial price shocks around the onset of the conflict, the price of Bitcoin and Ethereum have since outperformed both gold and stocks. Both assets have risen by roughly 10% during this time frame.
Source: https://www.cryptopolitan.com/iea-warns-of-global-energy-crisis-amid-iran-war/
