The Iran war has dramatically exposed the hidden fragility of the global energy industry’s reliance on just-in-time supply models, the head of the International Energy Agency has warned. Fatih Birol, speaking in Canberra, said decades of efficiency-focused energy supply management had stripped much of the redundancy and buffer capacity out of global energy systems, leaving them acutely vulnerable to sudden large-scale disruptions like the current crisis. He described the emergency as equivalent to the combined force of the 1970s twin oil shocks and the Ukraine gas disruption.
Just-in-time supply models, in which energy is produced, shipped, and consumed with minimal storage and reserve capacity along the chain, had delivered cost efficiencies during decades of relative geopolitical stability. But the Iran crisis had demonstrated that when a major supply shock struck, those efficiencies became catastrophic vulnerabilities. The world had too little spare capacity, too little redundancy, and too few alternative transit routes to absorb a disruption of this scale.
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. These combined losses are unprecedented in modern energy history.
The IEA deployed 400 million barrels from strategic reserves on March 11 — the largest emergency action in its history — and called for demand-side policies including remote work, lower speed limits, and reduced flights. Birol confirmed further releases were under consideration and that consultations were ongoing with governments across three continents. He met with Australian Prime Minister Anthony Albanese and called for sustained international engagement with the crisis.
Trump’s 48-hour ultimatum to Iran to reopen the strait expired without resolution, and Tehran threatened retaliatory strikes on US and allied energy and water infrastructure. Birol concluded that the world needed to fundamentally rethink its approach to energy supply resilience — building in more buffer capacity, more redundancy, and more diversification — so that a future supply disruption of this scale would not translate instantly into a global catastrophe.