The Worst Energy Crisis Ever
The Worst Energy Crisis in History Is Here — And April Will Be Even Worse
There are economic stories that feel urgent in the moment but fade within a week. And then there are the ones that rewrite the rules of the global economy for years to come. What is unfolding right now in global energy markets is unmistakably the latter. I've been tracking energy economics closely for a long time, and I can tell you with confidence: nothing in modern history — not the 1973 oil embargo, not the 1979 Iranian Revolution shock, not Russia's 2022 invasion of Ukraine — comes close to the scale of what we are dealing with today.
The International Energy Agency (IEA) — the world's foremost energy watchdog, founded in the aftermath of the 1973 crisis specifically to manage exactly these kinds of emergencies — has called this the largest supply disruption in the history of the global oil market. And according to IEA Executive Director Fatih Birol, the worst is still ahead of us.
How We Got Here: The Strait of Hormuz Closes
The trigger for this crisis is the U.S.-Iran war in the Middle East and its devastating impact on the Strait of Hormuz — the narrow waterway connecting the Persian Gulf to global ocean shipping lanes. To understand why this matters so much, consider the scale: on a normal day, roughly 20% of all the world's traded petroleum passes through this single chokepoint. That's approximately 20 million barrels per day of crude oil and refined products — more than the entire daily oil consumption of the United States and European Union combined.
Since the conflict began, shipping through the Strait of Hormuz has been reduced to a trickle, triggering the largest supply disruption in the history of the global oil market and pushing crude oil prices above $100 per barrel, according to the IEA. IEA
Brent crude — the international benchmark price for oil, used as the reference point for contracts traded across global commodity markets — swung from roughly $70 a barrel before the conflict to nearly $120 at its peak, before moderating to around $100 as diplomatic signals sent mixed messages to markets. Fortune That kind of volatility in a matter of days is extraordinary, and it sends shockwaves through virtually every corner of the global economy.
April Will Be Twice as Bad as March
If you thought March was bad, prepare yourself. IEA Executive Director Fatih Birol stated plainly that "the next month, April, will be much worse than March," explaining that some cargo ships carrying oil and gas had already transited through the Strait before the war broke out and were still arriving at ports in March. In April, he said, there is nothing — and the loss of oil supply in April will be twice the loss seen in March. CNBC
Global oil supply is projected to plunge by about 8 million barrels per day in March alone, with production curtailments in the Middle East only partially offset by higher output from non-OPEC+ producers such as Kazakhstan and Russia. AA.com.tr If April's losses are indeed double that figure, the world would be staring at a supply hole of approximately 16 million barrels per day — a number with no historical parallel.
To put that in context: the 1973 Arab oil embargo removed roughly 5 million barrels per day from global markets. The 1979 Iranian Revolution shock was similar in scale. IEA chief Birol noted that the current crisis has already eliminated 11 million barrels per day — more than the two previous oil crises combined — and further described the current situation as "equivalent to two oil crises plus the collapse of the gas market all at once." Athens Times
That is not a comparison I expected to be writing in 2026. Frankly, when I first saw that quote, I had to read it twice.
The Diesel and Jet Fuel Problem
The headlines tend to focus on crude oil prices, but in my experience, the more immediate pain point for ordinary households and businesses is always in refined products — the fuels that come out of crude oil after it's been processed in a refinery. Diesel powers trucks, trains, and cargo ships. Jet fuel powers aviation. These are the fuels that keep food on grocery shelves, packages moving through supply chains, and planes in the sky.
Birol identified the lack of jet fuel and diesel as the biggest immediate problem, warning that shortages already visible in Asia would spread to Europe by April or the beginning of May. CNBC
More than 3 million barrels per day of refining capacity in the region has already shut down due to attacks and the lack of viable export routes, compounding the supply squeeze on refined fuels beyond just crude oil. AA.com.tr
The refining capacity loss — meaning the ability to convert raw crude oil into usable fuels — is a particularly serious complication, because even if crude oil shipments eventually resume, you still need functioning refineries to turn that crude into diesel, jet fuel, and gasoline. Rebuilding that processing capacity takes time, even after a conflict ends.
The Emergency Reserves Response — And Its Limits
In response to the crisis, the IEA coordinated what it describes as the largest emergency oil reserves release in its history. Around 400 million barrels of oil from strategic reserves across 32 IEA member countries will flow into markets — roughly one third of readily available reserves and the largest release in the agency's history. Fortune
Strategic petroleum reserves (SPRs) are government-held emergency stockpiles of crude oil, maintained precisely for moments like this one. The United States, for example, holds its SPR in underground salt caverns along the Gulf Coast. They exist as a buffer against supply shocks — but they were never designed to substitute indefinitely for a 20-million-barrel-per-day shipping route.
The IEA itself described the reserve release as a "stop-gap measure," acknowledging that without a swift resolution to the conflict, the buffer it provides will only keep markets in check for a limited period. OilPrice.com Analysts have estimated a few weeks at most before the reserves injection is overwhelmed by continued supply losses.
Whether the coordinated release, combined with demand restraint and a fragile diplomatic pause, will be enough to prevent the crisis from deepening further "remains, for now, deeply uncertain," according to Energy Digital's analysis of the IEA's response. Energydigital
What the IEA Is Asking You To Do
Beyond the policy levers available to governments, the IEA has taken the unusual step of issuing direct recommendations to businesses and households. The IEA published a report identifying ten demand-side measures that can be implemented quickly, covering road transport — which accounts for around 45% of global oil demand — as well as aviation, cooking, and industry. IEA
The full list of recommendations includes:
- Work from home where possible to reduce commuting-related oil consumption
- Reduce highway speed limits by at least 10 km/h to lower fuel use for vehicles
- Use public transport over private cars wherever feasible
- Increase car-sharing and adopt more fuel-efficient driving practices
- Avoid non-essential air travel to ease jet fuel market pressure
- Shift industrial processes from LPG to alternative feedstocks where possible
- Alternate private vehicle access in large cities through number-plate rotation schemes
IEA Director Birol acknowledged that these measures cannot come close to replacing the lost supply, but argued that widespread adoption could meaningfully cushion the blow for consumers while diplomatic efforts continue. Energydigital
The Broader Economic Fallout
Energy is the foundational input of a modern economy. When energy costs spike, everything else follows. Transportation costs rise, which raises prices of every good that moves through a supply chain — which is nearly everything. Manufacturing costs increase. Airlines impose fuel surcharges. Heating and electricity bills climb.
The scale of the disruption is almost without precedent — the effective closure of the Strait of Hormuz has stripped the global energy market of approximately 11 million barrels per day, a figure more than double the combined shortfalls of the 1973 and 1979 oil shocks. Liquefied natural gas (LNG) supplies have also been severely hit, with the IEA estimating a reduction of around 140 billion cubic metres — nearly double the shortfall that followed Russia's invasion of Ukraine in 2022. At least 40 energy facilities across nine countries have been severely damaged, including the Ras Laffan complex in Qatar, the world's largest LNG production facility. Energydigital
LNG — liquefied natural gas — is natural gas that has been cooled to liquid form for easier transport by ship. It heats homes, generates electricity, and powers industrial processes across Europe and Asia. Losing nearly double the volume lost in the 2022 Russia-Ukraine energy crisis, on top of the oil shock, is the compounding effect that makes this crisis categorically different from anything that came before.
What To Watch Next
This situation is evolving by the hour. The key variables determining how severe this ultimately becomes are:
- Duration of the Strait of Hormuz closure: Every additional week compounds the supply shortfall exponentially as pipeline and alternative shipping alternatives are already running at capacity.
- Diplomatic progress: Any credible move toward a ceasefire or negotiated resolution would likely move oil prices sharply lower within hours.
- SPR sustainability: If the reserve release is exhausted before supply routes reopen, markets could face a second, sharper price spike.
- Demand destruction: At high enough prices, demand naturally falls — consumers drive less, airlines cut routes, factories reduce output. This self-correcting mechanism provides some natural ceiling on how high prices can go, but it comes at the cost of economic output.
I've covered energy markets through multiple crises, and my honest assessment is this: the outcome here depends almost entirely on factors that are geopolitical rather than economic. The market mechanisms are functioning — prices are signaling scarcity, reserve releases are cushioning the immediate blow, and consumers are beginning to adjust behavior. But no amount of economic policy can reopen a closed shipping strait. That requires diplomacy.
Until then, expect higher prices at the pump, tighter supply chains, and a global economy navigating the most serious energy shock it has ever faced.
Sources: International Energy Agency (IEA), CNBC, Fortune, Energy Digital
