The Iran energy crisis has created conditions that could trigger a broader global financial market crisis if the supply disruption persists and energy prices continue to rise, the head of the International Energy Agency has warned. Fatih Birol, speaking in Canberra, said the combination of extreme energy price volatility, disrupted supply chains, rising inflation, and slowing economic growth was creating systemic pressures that financial markets were struggling to absorb. He described the overall energy emergency as equivalent to the combined force of the 1970s twin oil shocks and the Ukraine gas disruption.
Birol said the 1970s oil shocks had produced major financial market dislocations as well as economic recessions, and the current crisis was larger in scale than either of those episodes. He said financial regulators and central banks needed to be explicitly monitoring the energy-to-financial market transmission channels and preparing contingency plans for the possibility that energy market stress translated into broader financial system instability.
The conflict began February 28 with US and Israeli strikes on Iran and has since removed 11 million barrels of oil per day and 140 billion cubic metres of gas from world markets. At least 40 Gulf energy assets have been severely damaged, and the Hormuz strait — through which approximately 20 percent of global oil flows — remains closed. The IEA deployed 400 million barrels from strategic reserves on March 11 in its largest emergency action.
Birol confirmed further releases were under consideration and said consultations with governments across three continents were ongoing. He called for demand-side policies including remote work, lower speed limits, and reduced commercial aviation. He met with Australian Prime Minister Anthony Albanese and said the financial stability dimensions of the crisis deserved equal attention from governments alongside the energy supply management challenges.
Trump’s 48-hour ultimatum to Iran to reopen the strait expired without result, and Tehran threatened retaliatory strikes on US and allied energy and water infrastructure. Birol concluded that preventing the energy crisis from becoming a financial crisis required urgent action on multiple fronts simultaneously — stabilizing energy supply through reserve releases and demand management, restoring the Hormuz strait, and ensuring that financial system regulators were fully prepared for the scenarios that prolonged energy market stress could produce.