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The International Energy Agency has indicated that the loss in energy output from the Middle East due to ongoing conflict is likely to take around two years to return to pre-conflict levels. The recovery timeline is expected to vary across countries, with Iraq projected to take longer compared to Saudi Arabia. The agency also noted that markets may be underestimating the impact of a prolonged disruption in the Strait of Hormuz. Supply constraints have already begun affecting global flows, especially to Asian markets, raising concerns about upward pressure on energy prices if the situation continues.
The International Energy Agency has assessed that restoring lost energy production in the Middle East, impacted by ongoing conflict in the region, could require close to two years before returning to pre-conflict levels. Advertisement
Fatih Birol, who heads the agency, conveyed in an interview with a Swiss publication that the recovery pace would differ across countries. He noted that Iraq is expected to face a significantly longer restoration period compared to Saudi Arabia, while the overall regional output is projected to stabilise only after an extended timeline of roughly two years.
Concerns have also been raised regarding the market's limited assessment of the consequences linked to a prolonged disruption at the Strait of Hormuz, a critical global shipping route for oil and gas.
According to the agency head, shipments that were already in transit before the escalation of conflict in Iran have reached their destinations, which has temporarily helped ease supply gaps in the market. However, he pointed out that no new tanker loadings took place during March, resulting in a halt in fresh deliveries of oil, gas and fuel, particularly affecting Asian markets.
This interruption has started reflecting in supply availability, and continued blockage or restriction of the Strait of Hormuz could further tighten global energy conditions. The situation may also lead to significantly higher energy prices if normal shipping routes are not restored in time.
On emergency preparedness, it was indicated that the agency remains ready to act promptly if required. While no immediate decision has been taken, the option of releasing additional emergency oil reserves, similar to earlier interventions, is being kept under active consideration depending on how the situation develops.
Source Reuters
5th Jun, 2025
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