The global energy system has been severely impacted by the ongoing conflict in West Asia, disrupting supplies and forcing consumers worldwide to pay higher prices and reduce consumption.
After the closure of the Strait of Hormuz on March 2, around 20% of global oil and liquefied natural gas flows were disrupted.
Not only have the oil and gas supplies been disrupted, but strikes by Iran and Israel on energy infrastructure across Western Asia have also damaged gas fields, oil refineries and export terminals, with experts warning that repairs could take years.
Soaring Price
The situation has also sparked market panic, with nearly 400 million barrels—around four days of global supply—wiped off the market, pushing prices up by almost 50%.
All of this has led the International Energy Agency to describe the situation as the most severe disruption to global energy supply ever, surpassing even the 1973 Arab oil embargo that caused widespread fuel shortages and economic strain.
The war in West Asia has pushed global energy markets into turmoil, with oil prices rising more than 50% to over $110 per barrel, while West Asian crude has surged to nearly $164. The spike has driven up fuel costs worldwide, forcing governments to act. Thailand has asked officials to cut energy use, Bangladesh has shut universities, Sri Lanka has introduced fuel rationing, China has curbed fuel exports, and the UK is considering lower speed limits. The International Energy Agency has suggested reducing demand through work-from-home and less air travel, while releasing 400 million barrels from reserves—though experts say this covers only about 20 days of disruption.
“You’re not going to conserve your way around this. What it’s going to translate to is price rises high enough that people stop consuming," said Dan Pickering, chief investment officer for Pickering Energy Partners.
“The breadth of what is at risk here in fuels, chemicals, LNG, and fertilizer inputs is what makes this moment qualitatively different from previous episodes of Gulf tension," said Aditya Saraswat, senior vice president at consultancy Rystad Energy, according to a report by Reuters.
Food Supply Hit
The impact is now spreading beyond energy into food supply. With nearly one-third of global fertiliser trade disrupted due to blocked routes, prices of key nutrients like urea have jumped 30–40%. Farmers in several countries are already facing shortages, while fertiliser plants in India, Bangladesh and Malaysia are cutting production. The UN has warned that if the crisis continues, it will affect planting, reduce crop yields, and lead to lower supplies of grains, dairy and meat—raising serious concerns about global food shortages.
