The executive director of the International Energy Agency (IEA), Fatih Birol, warned this Tuesday that, even if the Strait of Hormuz were reopened immediately, it will take “a long time” to recover a normal situation, and the risk is therefore a rebound in inflation and a brake on economic activity.
It will take a long time before we return to normal, because there are energy, oil and other facilities that have been badly damaged.
“Even if the Strait of Hormuz is reopened tomorrow, it will take a long time before it returns to normal, because there are very damaged energy, oil and other facilities” in the Persian Gulf, Birol highlighted in an interview with the France Inter radio station.
Progressive recovery
Asked about the two years that he himself had estimated as the time necessary to recover pre-war activity in the energy facilities of the Persian Gulf, he confirmed that estimate, but pointed out that everything will be done progressively.
The head of the IEA – an organization created in 1974 in reaction to the first oil crisis that brings together most of the OECD countries – insisted that the current one is “the biggest crisis in history” in terms of energy because it does not only affect the supply of oil, but also gas, fertilizers and petrochemical products.
“It will slow down economic growth and the longer it lasts, the more difficult it will be,” he said before emphasizing that it will particularly affect developing countries, for which he is more concerned than Europeans, because in many cases they will be confronted with “a spiral of debt” that will weigh on future generations.
In its monthly report on the oil market published on the 14th, the IEA noted that world oil production suffered a drop of 10.1 million barrels per day (mb/d) in March due to the war in the Middle East, which constitutes the largest drop in history.
And the blockade of the Strait of Hormuz led to losses in oil exports from the Persian Gulf of 13 mb/d, which have to be partially compensated by drawing on reserves, which are declining. A situation that has led the agency to sharply revise downwards its forecasts for oil demand.
Birol confirmed that “for the moment, Russia is coming out of this crisis well” because its oil revenues doubled in March, thanks above all to the rise in oil prices and to a lesser extent to the increase in its exports.
EU Transport Commissioner warns of “catastrophic” consequences
The European Commissioner for Sustainable Transport and Tourism, Apostolos Tzitzikostas, assured this Tuesday that “the only way out” of the “turbulence” in the Middle East is diplomacy and warned that, without permanent freedom of navigation, the consequences will be “catastrophic.”
“The only way out of this turbulence is diplomacy. Without permanent freedom of navigation, the consequences will be catastrophic,” said the commissioner at a press conference after a videoconference with the Transport Ministers of the Union countries.
A “pretty tough” summer
Furthermore, the Commissioner for Housing and Energy of the European Union, Dan Jorgensen, warned this Tuesday that we must prepare for a “quite tough” summer due to the consequences of the war in Iran, as he considers that the world market is under extreme pressure.
Flying will be more expensive and in some cases we could even see cancellations
“Flying will be more expensive and, in some cases, we could even see cancellations. This should be a big wake-up call. It should show us that the transition towards renewable energy sources is absolutely necessary,” he said in an interview in ‘La Vanguardia’.
Thus, he has expressed that he believes that prices will remain high for quite some time and that “even if peace is declared tomorrow, difficult weeks, months and even years await us when it comes to energy prices” because the natural gas infrastructure of the Middle East, especially that of Qatar, has suffered such a setback that it will take years to recover.
