"South Korea Takes the First Direct Hit"... IEA Chief Warns of World Economy's "Largest-Ever Energy Crisis"

[The Financial News] Fatih Birol, executive director of the International Energy Agency (IEA), has warned that Europe may have only about six weeks of jet fuel left. He also predicted that Asian countries such as South Korea and Japan will be on the front line of the impact.

On the 16th (local time), Birol said in an interview with The Associated Press (AP) that the war involving Iran and a potential blockade of the Strait of Hormuz would amount to "the largest energy crisis we have ever experienced." He added, "It would put us in serious trouble and have a major impact on the world economy."
Ultimately, the problem is the Strait of Hormuz. Birol warned about Europe's jet fuel situation, saying, "If we cannot reopen the Strait of Hormuz and refineries are forced to shut down, we will soon start hearing that some flights between cities are being canceled due to a shortage of jet fuel."
He went on, "There is the issue of high prices, and of whether countries can secure supplies of gas, jet fuel and diesel." He expressed concern that "if the Strait of Hormuz does not reopen by the end of May, many countries—starting with those whose economies are vulnerable—will face enormous difficulties, from high inflation and slower growth to, in some cases, outright recession."
Birol predicted that Asian countries would be hit first in such a scenario. "Japan, South Korea, India, China, Pakistan and Bangladesh—Asia will be on the front line of the impact, followed by Europe and the Americas," he said, stressing, "If the war does not end, no country will be immune."

There are currently more than 110 oil tankers and at least 15 Liquefied Natural Gas (LNG) carriers waiting in the Persian Gulf region. However, Birol assessed that even if these ships manage to pass through the Strait of Hormuz, it would help ease the crisis but would not be enough to resolve it.
He noted, "More than 80 key assets in the region have been damaged, and over one-third of them have been severely hit." He added, "Expecting a quick recovery would be extremely optimistic. Returning to pre-war levels will only happen gradually and could take up to two years."
Regarding Iran's attempt to impose transit fees in the Strait of Hormuz, he warned, "Once such a change is made, it may be very difficult to reverse. If a toll system is established here, it will be hard to prevent it from being applied elsewhere."
bng@fnnews.com Kim Hee-sun Reporter