IEA Chief: Present Energy Crisis is Worse than 1973, 1979, & 2022 Together

The head of the International Energy Agency (IEA) stated that the oil and gas crisis caused by the blockade of the Strait of Hormuz is more severe than those in 1973, 1979, and 2022 combined.

Fatih Birol, Executive Director of the IEA, indicated that the impact of the Middle East conflict on the oil market surpasses that of the 1970s oil shocks and the aftermath of Russia's invasion of Ukraine, aligning with Donald Trump's deadline for Iran to reopen the waterway.

He cautioned that developing nations are particularly vulnerable to rising oil, gas, and food prices, leading to increased inflation, while European countries, Japan, and Australia will also experience some impact.

Oil swings, Stocks Plummet as Trump Threatens Iran

On Tuesday, oil prices fluctuated around $110 a barrel, initially rising after Trump's warning that a “whole civilisation will die tonight” unless Iran reaches a deal before subsequently dropping to just below that level.

Moreover, investors are worried due to Trump's escalating threats against Iran, specifically his demand regarding the Strait of Hormuz in peace negotiations. He warned on Truth Social that “a whole civilisation will die tonight,” in tandem with reports of US strikes on military targets in Kharg Island, crucial for Iranian oil exports.

Remarkably, Daniela Hathorn, a senior market analyst at Capital.com, noted increased market volatility attributed to the critical US-Iran conflict, presenting investors with two potential outcomes: escalation through direct strikes or a last-minute de-escalation that could reverse risk assets. The absence of a clear resolution is currently leading to market indecision.

On Monday, Trump set a deadline of 8 p.m. U.S. Eastern time for Iran to agree to a deal with Washington, threatening fresh attacks on civil infrastructure if they do not comply.

As a result, European markets declined on Tuesday, with the FTSE 100 down 0.84%, Germany’s DAX falling 1.1%, and France’s CAC 40 losing 0.7%. Wall Street also opened lower, with the Dow Jones down 296 points, or 0.64%.

Asian Stocks Split Amid Iran-Driven Stagflation Worries

Asian stock markets showed mixed performances: Japan’s Nikkei was flat, South Korea’s Kospi rose by 1.1%, and Hong Kong’s Hang Seng decreased by 0.7%.

Besides, markets have faced volatility following the February US-Israel attack on Iran, with the resulting Strait of Hormuz closure heightening inflation concerns and shaking investor confidence.

On Monday, IMF head Kristalina Georgieva indicated that the war is likely to result in higher inflation and slower global growth. She mentioned that before the conflict, the IMF anticipated slight increases in its global growth projections for 2026 and 2027, but now predicts “all roads lead to higher prices and slower growth.” The IMF's World Economic Outlook report is due next week.

According to the RAC, drivers in the UK experienced notable fuel price increases during Easter, with petrol rising by 2.6p per litre to 157.02p and diesel increasing by 4.2p to 189.42p.

The Iran war is contributing to stagflation in the British economy, as indicated by a recent S&P Global poll revealing the weakest service sector growth in 11 months due to decreased spending.

Eventually, RSM UK's chief economist, Thomas Pugh, suggests that the UK faces ongoing stagflation, with a recession likely if the conflict continues.

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