Alert Upgraded! IEA: Oil losses in April will be twice that of March, with the impact surpassing the combined total of three historical crises.

Fatih Birol, Director of the International Energy Agency (IEA), warns that the energy crisis triggered by the Middle East war has become the most severe supply shock in history, surpassing the combined intensity of the two oil crises of the 1970s and the 2022 Russian gas supply cut, and the situation continues to deteriorate.

In an interview with Nicolai Tangen, CEO of Norges Bank Investment Management, on his podcast, Birol stated that the oil supply loss in April will be twice that of March. He pointed out, “In March, some tankers that had crossed the Strait of Hormuz before the outbreak of the war were still gradually arriving in port, but in April this buffer will completely disappear. ‘There’s nothing left for April,’” he said.

Birol also stated that the IEA is considering further releases from strategic reserves and warned that shortages of jet fuel and diesel have already impacted Asia, and are expected to spread to Europe from April to May. He emphasized that energy rationing may soon become a reality in multiple countries, and the crisis will drive up inflation and drag down the growth of many economies, particularly emerging markets.

Supply gap hits historical record

Birol cited specific data in the podcast, directly comparing the current crisis to historical precedents. He stated, “During the oil crises of 1973 and 1979, each lost around 5 million barrels per day of oil supply, which triggered recessions in multiple countries. The current Middle East war has caused a supply loss of over 12 million barrels per day, exceeding the combined total of the two crises.”

Meanwhile, natural gas supply losses caused by the blockade of the Strait of Hormuz also exceed the scale of the Russian gas supply cut in 2022. Birol said, "The current crisis has already surpassed the combined total of those three crises." He also pointed out that, apart from oil and gas, commodities such as petrochemical products, fertilizers, and sulfur are also suffering severe supply chain disruptions. "We are heading toward the largest major supply interruption in history."

Around 40 key energy assets in the Middle East region have been damaged.

April’s gap worsens; refined oil shortages emerge as central issue

Birol explained the reason for the sharp deterioration in April: Tankers arriving in March were mostly ships that had begun their journey before the outbreak of war on February 28, and this batch of goods provided a brief buffer for the market. Entering April, this stock effect will disappear, and supply losses will double from March.

In terms of supply structure, Birol regards jet fuel and diesel shortages as the most prominent current issues.

He stated that these shortages have already manifested in Asia and are expected to transfer to Europe in April or early May. Compared to crude oil, shortages of refined oils have a more direct impact on the real economy and will directly affect aviation transport and logistics costs.

Releasing reserves as a stopgap, not a solution

Facing the ongoing deterioration in supply, Birol said the IEA is assessing market conditions daily—even hourly—and may advise member countries to release further strategic reserves. Earlier this month, the IEA’s 32 member countries agreed to release a record 400 million barrels of emergency reserves to partially offset the supply gap caused by the war.

However, Birol takes a cautious view of the effect of releasing reserves. “It can only help ease the pain, not cure the problem,” he said. “The solution is to reopen the Strait of Hormuz. We are merely buying time, and I don’t think releasing reserves can fundamentally solve the problem.”

He said he would make recommendations to governments when the time is right, but made a clear distinction between “intervening” and “solving” in his wording.

Since the United States and Israel launched strikes on Iran on February 28, and Tehran retaliated against the Gulf region, international oil prices have surged. In March, global benchmark Brent crude soared more than 60%, registering the largest monthly increase since records began in the 1980s.

On Tuesday of this week, U.S. President Trump stated that U.S. troops would withdraw from Iran “within two or three weeks,” which triggered a brief rebound in financial markets. However, Birol’s remarks indicate that even if the conflict eases, the supply gap and infrastructure damage already caused will be difficult to reverse in the short term, and the structural pressures facing the market will persist.

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