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international energy agency
Without a US-Iran Peace Deal, the World Is Headed for an Energy Crisis Apocalypse
Global reserves of petroleum could fall so low by September, if the crisis is not resolved, that they will reach what analysts call “an operational floor.”
Jun 06, 2026
The International Energy Agency has made its May report free to download, and the news is not good for the second and third quarters of this year, i.e. April-September. The IEA hopes things will look up in the fourth quarter, but premises that expectation on an early end to the US conflict with Iran and a reopening of the Strait of Hormuz.
At the moment (June 5, 2026), there does not seem much movement on that front, and in fact the US and Iran are not only skirmishing with one another but Iran is making good its threat to hurt US allies like Bahrain and Kuwait every time the US hurts Iran.
One was killed and dozens injured in Kuwait on Wednesday by Iranian Shahed drone barrages that also damaged the airport. Kuwait Airlines shut down briefly but is now flying from a different terminal; it is the only carrier flying from Kuwait. Iran also targeted the HQ of the US Fifth Fleet in Bahrain but CENTCOM says the missiles were intercepted. Iran says the attacks were in reaction to US strikes on Qeshm Island, which is a base for Iranian missiles and a radar installation.
Iranian Foreign Minister Abbas Araghchi said Friday Iran time that no progress has been made in talks with the US, though contacts are ongoing.
Last week alone, US petroleum reserves fell by 10.6 million barrels, to the lowest level seen since 2004.
In the meantime, the IEA says that in Q2, ending June 30, world demand for petroleum will be down by 2.45 million barrels a day. This reduction is what economists call demand destruction, and it is a very bad sign. People are just using less petroleum because it is more expensive than it was before the US and Israel attacked Iran on February 28. In the US, gasoline is up by 35% to 50%. In Europe, diesel, which runs trucks, was the equivalent of $6.78 a gallon in February, and is now $8.02 per gallon (€1.82 per liter). If you are running a fleet of trucks over thousands of miles, that is a huge loss, and you might consolidate and cut out less remunerative routes.
Likewise, airlines have cancelled tens of thousands of flights and ticket prices have risen, so some passengers are cancelling or postponing trips. Trucks deliver goods to retail stores, so prices of commodities have gone up, and some customers have put off buying things they don’t desperately need right now. If the retailer doesn’t sell a product, it doesn’t order more, so the trucks don’t roll as often. And if the goods aren’t selling, the factories scale back production, so they use less petroleum, too.
The IEA statistics suggest that the pain is greater for the poorer countries, which makes sense. The wealthy countries’ consumers are paying more and cutting back a bit. Those in the developing world are just going without, as I pointed out on Monday.
The IEA expected the world to produce 106.1 million barrels a day in 2026. It won’t. That projection has been revised down to 102.2 million barrels a day, a reduction of 3.9 million barrels a day. That is severe. But here is the catch. That is the reduction if “flows through the Strait gradually resume from June.” As Qasim al-Ali points out, that is an iffy bet as things now stand. So the shortfall in production will be bigger. Which will slow the world economy even more.
The agency observes, “With Hormuz tanker traffic still restricted, cumulative supply losses from Gulf producers already exceed 1 billion barrels with more than 14 mb/d of oil now shut in, an unprecedented supply shock.”
The shock hasn’t been as bad as it could have been so far, for several reasons. We just saw that there is enormous demand destruction, with the economic slowdown it implies. Also, there was a glut in the oil market going into the crisis, which takes some of the pressure off. The US, Europe, and China are drawing down their Strategic Petroleum Reserves (SPRs) at an alarming rate. That move eases the pain in the short term. But low reserves imply a limited ability to deal with further supply shocks that may occur next year. Israeli Prime Minister Benjamin Netanyahu has signaled that he’d like to attack Iran again. So the big crisis may be next year this time, when there won’t be any SPR cushion.
Also, Strategic Petroleum Reserves are not infinite. China has enough for six months. At some point governments will become reluctant to draw them down any more, and then the interruption in supplies from the Gulf will hit all that much harder. The reserves held at oil hubs can’t go to zero, moreover. The inventory at Cushing, Oklahoma has fallen from 33 to 24.5 million barrels. But it can’t go lower than 20 million barrels without gumming up the pipelines and refineries.
Last week alone, US petroleum reserves fell by 10.6 million barrels, to the lowest level seen since 2004.
Global reserves of petroleum could fall so low by September, if the crisis is not resolved, that they will reach what analysts call “an operational floor.”
And when that happens, the shortages won’t be able to be finessed anymore, not by demand destruction and not by release of reserves.
And when we cross that threshold, oil shoots suddenly to $200 a barrel, which is an energy crisis apocalypse and spells deep gloom for the global and the US economy.
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US-Israeli War on Iran Sparks 'Largest Supply Disruption in History of Global Oil Market': IEA
"The oil market challenges we are facing are unprecedented in scale," said the executive director of the International Energy Agency.
Mar 12, 2026
The International Energy Agency said Thursday that the US-Israeli war on Iran and its reverberating impacts across the region have sparked "the largest supply disruption in the history of the global oil market," with flows of crude and other fossil fuel products through the Strait of Hormuz plummeting and Gulf nations slashing production as they run out of storage space.
The agency noted in its monthly report on the state of the global oil market that "oil prices have gyrated wildly since the United States and Israel launched joint airstrikes on Iran on 28 February," pointing to "disruptions to Middle Eastern supplies due to attacks on the region’s oil infrastructure and the cessation of tanker traffic through the Strait of Hormuz," which have "sent Brent futures soaring, trading within a whisker of $120/bbl."
The IEA's report came a day after the agency's 32 member nations—including the US—agreed unanimously to release a total of 400 million barrels of oil from their emergency reserves to "address disruptions in oil markets stemming from the war in the Middle East."
"The oil market challenges we are facing are unprecedented in scale, therefore I am very glad that IEA member countries have responded with an emergency collective action of unprecedented size,” said the agency's executive director, Fatih Birol.
The IEA assessment on Thursday came as oil prices surged again as Mojtaba Khamenei, Iran's new supreme leader, vowed to keep the Strait of Hormuz closed. An estimated 20% of the world's oil passes through the route each year.
Earlier on Thursday, Iraq—which has among the largest confirmed reserves of crude oil in the world—suspended all of its oil terminal operations after two vessels were attacked off the nation's coast. NPR reported that Iran "took responsibility for attacking one of the tankers, which it said was owned by the US."
The US and Israel have also bombed Iran's oil infrastructure, choking Tehran with black smoke and spraying toxic rain that prompted warnings from the World Health Organization (WHO).
"The black rain and the acidic rain coming with it is indeed a danger for the population, respiratory mainly," WHO spokesperson Christian Lindmeier told reporters in Geneva earlier this week.
Heba Morayef, Amnesty International's regional director for the Middle East and North Africa, said Wednesay that "the potential for vast, predictable, and devastating civilian harm arising from strikes targeting energy infrastructure, including uncontrolled deadly fires, major disruptions to essential services, environmental damage, and severe long-term health risks for millions, means there is a substantial risk such attacks would violate international humanitarian law and in some cases could amount to war crimes."
“Regardless of whether a military objective is cited to justify targeting energy infrastructure, under international humanitarian law all parties have a clear obligation to take all feasible precautions to reduce civilian harm and refrain from attacks that cause disproportionate death or injury to civilians or damage to civilian objects," said Morayef. "This includes any foreseeable knock-on, indirect adverse effects on civilians’ life and health, such as exposure to toxic chemicals.”
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Global Energy Report Offers Choice for Humanity: Renewable Transition or 'Dystopian Future' Pushed by Trump
"At COP30, governments must reject this nightmare fantasy, uphold a just transition, and choose a fast, fair, and funded fossil fuel phaseout," said one climate campaigner.
Nov 12, 2025
An International Energy Agency report published Wednesday underscores that world leaders are at a crossroads and must decide whether to embrace an ambitious transition to renewable energy or succumb to the agenda of US President Donald Trump and others bent on propping up the planet-wrecking fossil fuel industry.
The IEA said in its flagship World Energy Outlook that under a so-called "current policies scenario," oil and fracked gas demand could continue to grow until the middle of the century, complicating the organization's earlier projections that global fossil fuel demand could peak by 2030.
The change came amid pressure from the Trump administration and Republican lawmakers in the United States, the largest historical emitter of greenhouse gases. The New York Times noted Wednesday that "Republicans in Congress have been threatening to cut US government funding to the IEA if it does not change the way it operates."
"In an essay posted online, the authors of this year’s report said they were restoring the current policies scenario because it was appropriate to consider multiple possibilities for the way the future might unfold," the Times added. "They did not say they were responding to pressure from the United States."
Fatih Birol, the IEA's executive director, said in a statement that the scenarios outlined in the new report "illustrate the key decision points that lie ahead and, together, provide a framework for evidence-based, data-driven discussion over the way forward."
Under all of the scenarios examined by the IEA, "renewables grow faster than any other major energy source" even as the Trump administration works to roll back clean energy initiatives in the US and promote fossil fuel production.
China, the report states, "continues to be the largest market for renewables, accounting for 45-60% of global deployment over the next ten years across the scenarios, and remains the largest manufacturer of most renewable technologies."
The analysis was released as world leaders gathered in Belém, Brazil for the COP30 climate talks, which the Trump administration is boycotting while lobbing attacks from afar.
David Tong, global industry campaign manager at Oil Change International, said the IEA report "sets out a stark and simple choice: We can protect people and communities by safeguarding 1.5ºC [of warming], settle for a disastrous business-as-usual 2.5ºC, or choose to backslide into a nightmare future of much higher warming."
"This year's report also shows Donald Trump's dystopian future, bringing back the old, fossil-fuel intense, high-pollution current policies scenario, charting an unrealistic pathway where governments drag their energy policies backwards and rates of renewable energy adoption stall, leading to high energy prices and unmitigated climate disaster," said Tong. "At COP30, governments must reject this nightmare fantasy, uphold a just transition, and choose a fast, fair, and funded fossil fuel phaseout."
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