Before the Hormuz closure, approximately 20 million barrels of oil transited the strait every day. By the time Fatih Birol sat down with Michael Liebreich at the IEA’s Paris offices on 19 March, that figure had dropped to roughly four million. The 16-million-barrel daily shortfall represents not merely a supply disruption but, in Birol’s characterisation, the mother of all energy crises, one that he explicitly argues is larger in scale than the 1973 and 1979 oil shocks that reshaped global energy markets for the following five decades.
The IEA had one week earlier taken the extraordinary step of releasing 400 million barrels from member countries’ strategic reserves, a move that Birol says drove oil prices down by $18 per barrel on announcement. He was unambiguous about the limitation of that response: it reduces pain, but the single most important solution remains reopening the strait.
The candour of that assessment is analytically significant. The head of the institution whose founding mandate is oil market security is stating in direct terms that the toolkit available to that institution, strategic reserves, diplomatic coordination, and demand-side emergency measures, cannot resolve the fundamental problem, which is a physical transit constraint enforced by military means. The gap between what international energy institutions can do and what the situation requires is itself a data point about the structural inadequacy of the existing international energy security architecture when faced with a deliberate closure of the world’s most critical maritime energy corridor.
The Scale Problem in Comparative Perspective
Birol’s comparison to the 1970s oil shocks is worth examining quantitatively. The 1973 Arab oil embargo removed approximately five million barrels per day from world markets. The Iranian Revolution of 1979 removed roughly three to four million barrels per day at its peak disruption. The current Hormuz closure, on Birol’s figures, has removed sixteen million barrels per day from transit, a volume three to four times the scale of either previous shock. The 1973 crisis alone produced a global recession, a fundamental restructuring of energy policy across industrialised economies, and policy responses that shaped the nuclear, automotive efficiency, and fossil fuel diversification investments of the following two decades. Birol is arguing, with reference to those precedents, that 2025 and 2026 will represent an equivalent or larger inflection point visible in retrospect as clearly as 1973 appears in today’s energy data.
The strait carries more than oil. Birol notes that approximately 20 percent of global LNG transits Hormuz, alongside critical commodity flows including fertilisers and sulphur. However, he draws an important distinction between the oil and gas market exposures. LNG represents only around three percent of the total global natural gas supply, meaning the gas market’s response dynamics are different from the oil market’s. The immediate pain is concentrated in Asia, where India, China, Japan, Korea, and others are direct importers of Gulf LNG. The European transmission will come through a different mechanism: competition for spot LNG cargoes in global markets, which will drive up prices that, in turn, affect European electricity costs through the marginal role that gas plays in setting wholesale power prices. The crisis that began as a regional oil supply disruption has, in Birol’s framing, the potential to become one of the biggest structural economic dislocations the global economy has experienced, with the most severe impacts on emerging and developing countries.
The Three Tools and Their Limits
Birol describes the IEA’s immediate response as operating across three parallel tracks. The strategic reserve release of 400 million barrels, a unanimous decision across all member countries, including the United States, provided the largest-ever coordinated oil stock drawdown and produced an immediate price reduction of $18 per barrel. International energy diplomacy, running on near-daily calls with energy ministers from the US, Saudi Arabia, Japan, Canada, Brazil, and others, is attempting to sustain market-stabilising coordination across governments with divergent interests. The third track is a demand reduction programme: an IEA report released the day after the interview, outlining practical measures to curb oil consumption, including expanded teleworking and free public transportation, with the explicit goal of reducing demand growth in the near term.
The limits of all three are embedded in Birol’s own framing. A reserve release reduces prices temporarily but does not replace the physical supply that is not transiting. Diplomatic coordination can sustain market confidence and prevent disorderly selling or political overreaction, but cannot create oil that is not moving. Demand reduction at the margin, however, practically useful, cannot close a sixteen-million-barrel daily gap. The IEA’s role in the crisis is one of damage limitation rather than resolution, and Birol is clear-eyed enough about that constraint to state it without qualification. The political solution to transit, he says, is the only real solution. Everything else is managing consequences.
The 1970s Structural Analogy and Why It Points Toward Clean Energy
The most analytically substantive part of Birol’s argument concerns the structural policy response that large energy shocks historically catalyse. He identifies three consequences of the 1970s oil crisis that reshaped global energy over the following decades. The first was a major push into nuclear power: approximately 40 percent of the nuclear capacity operating in the world today was installed as a direct policy response to the 1970s oil price shocks, a historical fact that contextualises the current nuclear renaissance discussions not as a novel phenomenon but as a second wave of the same policy logic. The second was a transformational improvement in automotive fuel efficiency: the industry shift to smaller, more efficient engines cut fuel consumption per 100 kilometres by approximately 50 percent over two decades, a structural demand reduction that proved more durable than any supply-side intervention. The third was geopolitical diversification: Europe’s turn toward Russian energy, which has now itself become a major supply security failure, originated as a deliberate attempt to reduce dependence on Middle Eastern oil.
Each of those 1970s responses was a rational attempt to reduce exposure to a specific identified risk. Each produced structural changes in energy markets that persisted for decades. Birol argues that the current crisis will produce analogous structural responses, directed at the technologies that are already in motion and that address both the climate rationale and the energy security rationale simultaneously. Solar, wind, batteries, nuclear, and electric vehicles all reduce dependence on imported oil and gas, regardless of whether the policy motivation is decarbonisation or supply security. The crisis does not create new technologies; it accelerates the deployment of those already on the growth curve by adding a powerful energy security premium to their existing economic and environmental arguments.
75% Solar: The Deployment Data That Frames the Transition
Birol anchors his structural argument in a single data point from 2025: 75 percent of all new power plants installed globally last year were solar. The figure, drawn from the IEA’s own tracking data, is striking not as an energy transition milestone but as a market reality that shapes how the current crisis will interact with the energy system going forward. A global power sector in which three-quarters of new capacity additions are solar is a fundamentally different environment for oil and gas price transmission than the power sector of the 1970s, where virtually all new capacity was fossil-fuelled or nuclear.
The relevance to the current crisis is direct. Higher gas prices resulting from LNG market competition will, as Birol notes, provide incentives for consumers to accelerate the shift to renewables. The dynamic has already been demonstrated in Europe following Russia’s invasion of Ukraine, where renewable installations increased substantially not because of climate policy acceleration but because energy security concerns made the domestic generation argument for solar and wind compelling on purely economic grounds. The crisis adds a third layer to the renewable deployment case that already rested on cost competitiveness and decarbonisation policy. The combination of all three drivers simultaneously is what supports Birol’s expectation that the current shock will produce a stronger and more durable boost to clean energy than any previous energy crisis.
Nuclear, EVs, and the Limits of New Oil Field Development
Beyond solar and wind, Birol identifies three specific vectors for the nuclear acceleration he anticipates. Lifetime extensions and refurbishment of existing plants offer the fastest near-term capacity preservation. New conventional nuclear projects will advance in planning and permitting in countries that had previously deferred them. And the development of small modular reactors may find the policy and commercial conditions for commercialisation that have so far proved elusive. Each of these pathways operates on a different timescale, but the direction of travel across all three is consistent with Birol’s observation that nuclear plants built as a response to the 1970s shocks now represent 40 percent of global installed nuclear capacity.
Electric vehicles occupy in Birol’s framework the role that automotive efficiency improvements played after 1973, the consumer-side response that translates an oil supply shock into a permanent reduction in oil demand rather than a temporary reduction in consumption. If households and fleet operators accelerate EV adoption in response to high oil prices and supply insecurity, the structural demand impact is lasting in a way that price-induced behavioural conservation is not. The analogy to the fuel efficiency improvements of the late 1970s and 1980s is historically grounded: those improvements, driven by a combination of regulation and consumer preference in response to high prices, reduced per-kilometre fuel consumption by 50 percent and kept oil demand structurally lower than it would otherwise have been for decades.
Birol is notably sceptical about one of the alternative responses that the crisis debate has generated: accelerated investment in new oil and gas exploration and development. His reasoning is specific and quantitative. New exploration licensing and field development require seven to ten years from licence award to production. That timeline is categorically incompatible with addressing the current supply gap, which is measured in months and years, not decades. The argument that the vulnerability exposed by the Hormuz closure should be addressed by investing more in oil and gas is not wrong as a general principle of supply diversification, but the timescales involved mean it offers nothing to the countries and economies suffering the immediate consequences of the disruption. The technologies that can respond within the relevant policy horizon are those already on the growth curve: solar, wind, storage, nuclear refurbishment, and electrification of transport.
The IEA’s Institutional Position and the Data Credibility Argument
The conversation between Birol and Liebreich also surfaced the institutional pressure the IEA is navigating on its analytical mandate. US Energy Secretary Chris Wright has publicly argued that the IEA should focus less on climate scenarios and net-zero analysis, returning to what he characterised as its core function as a data organisation focused on hard energy security. Birol’s response is diplomatically careful but substantively clear. The 400-million-barrel reserve release was a unanimous decision of all 55 member governments, including the United States, demonstrating that on the operational energy security mandate, consensus holds. On the analytical and scenario work, he declines to characterise it as external to the IEA’s core function, arguing instead that the World Energy Outlook’s credibility, the reason its annual publication is the news while comparable reports from other institutions receive less attention, rests precisely on the IEA’s reputation for analytical rigour and independence.
The phrase Birol returns to is that data always wins. It is simultaneously a methodological statement, a political positioning, and an institutional defence. The IEA’s influence over energy investment decisions, policy frameworks, and market expectations derives from the trust placed in its numbers by governments, financial institutions, and industry participants who disagree with each other on most other energy policy questions. Compromising that credibility by shifting the analytical frame in response to political pressure from any single member government, including the founding member, would undermine the institution’s value to all its members, including the US. Whether the IEA’s World Energy Outlook scenarios continue to include net zero pathways and clean energy transition analysis will be resolved in processes that are not publicly visible. What Birol’s framing makes clear is that he views the data credibility argument as the strongest defence of the analytical breadth he has built into the institution, and that he intends to advance it.
