Middle East Conflict Threatens Global Economy with Major Energy Crisis

The ongoing conflict in the Middle East poses a “major threat” to the global economy, with at least 40 energy assets across nine countries sustaining significant damage, according to International Energy Agency (IEA) Executive Director Fatih Birol. The disruption to energy supplies is comparable to multiple major crises combined, raising concerns of widespread economic repercussions.

Energy Asset Damage and Supply Disruptions

Birol stated that over 40 energy assets in the Middle East have been “severely or particularly severely” damaged due to the conflict Al Arabiya, Financial Post. This damage will likely prolong disruptions to global supply chains even after the conflict ends. The conflict has all but closed the vital Strait of Hormuz, a critical waterway for global oil and gas transport.

Crisis Magnitude: A Combination of Past Disruptions

The current energy crisis is being described as equivalent to the combined impact of the two major oil crises of the 1970s and the 2022 natural gas crisis triggered by Russia’s invasion of Ukraine WIONews. During the 1970s crises, the world experienced losses of approximately five million barrels per day in each instance, totaling ten million barrels per day combined. Currently, the world is experiencing a loss of 11 million barrels per day, exceeding the impact of those earlier crises.

Economic Impact and Global Concerns

Birol warned that the global economy is facing a “very, very serious threat” and expressed hope for a swift resolution to the conflict Financial Times. He emphasized that no country will be immune to the consequences if the crisis continues. Oil prices have already responded to the instability, with WTI crude briefly reaching $100 per barrel on Monday, March 23, 2026.

Strait of Hormuz and Global Energy Supply

The blockage of the Strait of Hormuz, which handles approximately 20% of the world’s oil and gas shipments, is a key driver of the crisis. Exchanges of threats between the US and Iran regarding the opening of the strait highlight the escalating tensions and the potential for further disruption.