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According to International Energy Agency Executive Director Fatih Birol, there is a “disconnect” between how markets are perceiving the energy crisis and the reality on the ground in the Middle East.

At an Atlantic Council Front Page event on Monday, Birol argued that oil prices, while high, are “not reflecting the severity of the problem” posed by the Iran war’s damage to infrastructure and the closure of the Strait of Hormuz.

However, he warned, oil prices will soon “converge” with the on-the-ground reality, knocking the global economy further into disarray.

“No country is immune to this,” he said. “Everybody will be touched.”

Birol spoke as part of the Atlantic Council’s programming around the International Monetary Fund (IMF)-World Bank Spring Meetings. As the meetings continue, Birol warned that if the Iran war drags on, “everybody, one after another, will revise their economic growth expectations. Inflation will get a strong push up in many countries.”

Below are other highlights from the event, moderated by Helima Croft from RBC Capital Markets, in which Birol talked about how the Iran war would impact countries across the world—and what the IEA is planning on doing in response.

Years of recovery already lie ahead

• Birol argued that today’s war is “the greatest energy security threat in history,” because it has caused daily global oil production to drop by thirteen million barrels per day—more than double the amount that was lost during major oil crises in 1973 and 1979. He also noted that the shortfall in gas further compounds the shock, making this crisis more severe than the European energy crisis that followed Russia’s invasion of Ukraine.
• He warned that those crises “led to recession in many countries,” sending several developing economies “into death spirals for years,” with “serious economic and political consequences.”
• Considering all the infrastructure that has been damaged in the war, Birol argued that even if the war ended today, “coming back to where we were before the crisis” (in terms of oil production and prices) “may take some time, maybe up to two years.”
• He argued that the energy crisis will have severe consequences for both importing and exporting countries, but particularly in Asia and the Middle East. As an example, he mentioned Iraq, citing that oil accounts for around 90 percent of the government’s revenues. Thus, he said, the country’s struggle to export oil amid the Strait of Hormuz standstill “is going to be a big problem,” particularly for the political situation, which is “very fragile.”

How the IEA is responding

• Birol spoke about the IEA’s “historic” decision in March to release 400 million barrels of oil stored in emergency reserves. He noted that while it is “good news” that prices sank after the release was announced, the measure “is not a solution,” since it is only “reducing the pain” instead of curing it.
• “One issue which bothers me,” Birol explained, is that “some countries are buying these stocks” and at the same time imposing “export restrictions,” limiting the flow of oil internationally. This “is not helpful at all,” he said.
• In discussing future releases of oil reserves, Birol noted that Japan will likely follow soon. He added that there is room for further releases because the March decision only used 20 percent of the total oil in reserve. “We have 80 percent in our pocket,” he explained.
• “I very much hope we don’t need to do it, but if it is needed, we are ready to act immediately,” he said.
• Birol also spoke about having launched a new “coalition” with the IMF and World Bank this month to help guide countries on the economic and energy policies needed to blunt the economic impacts of the Iran war.

Birol’s roadmap ahead

• Looking back on how the oil crises in the 1970s fueled efforts to reduce oil dependency, Birol predicted that there will be “similar reactions from governments” and “from industry” following this crisis, including an acceleration of nuclear power and renewable energies. He warned, though, that “coal use may increase” in some countries.
• Birol shared his “golden rule for energy security”: Diversification. “Diversify from whom you get your energy, diversify your energy mix, diversify your trade routes,” he urged.
• “Overreliance on one single country, one single trade route, one single fuel is always risky,” he said, adding, “Europe paid big money” for being overly reliant on Russia.
• He also highlighted that similar supply concentration risks are rearing their head across other energy supply chains, particularly in the refining and processing of critical minerals. “We are dealing with one Hormuz now,” he said. “There may be several Hormuz just waiting if you aren’t able to diversify these critical mineral supply chains.”
• Ultimately, while he discussed measures that are being taken by governments to mitigate this crisis, Birol emphasized that “the single most important solution to this problem is the free flow of oil and gas through the Strait of Hormuz.”

Katherine Golden is an associate director of editorial at the Atlantic Council.

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Further reading

Image: The IEA’s Fatih Birol speaks on global energy market resilience in a moment of crisis at Atlantic Council headquarters in Washington, DC on April 13, 2026.