THE Iran war has driven oil prices to their highest levels in years, data has shown, as experts warn the conflict could trigger the ‘worst energy crisis since the 1970s.’
Brent crude, the international benchmark for oil prices, spiked by 29% to nearly $120 per barrel early on Monday, according to Business Insider – a peak not seen since 2022, when Russia’s invasion of Ukraine sent global markets rattling.
The surge comes after Iran effectively shut down the Strait of Hormuz, a vital maritime shipping route for Middle Eastern oil, in retaliation for joint US-Israeli strikes that killed its longtime ruler, Ayatollah Khamenei.
Key oil producers including Kuwait and Bahrain have announced they may have to cut production after Iranian retaliatory drone strikes damaged several oil refineries across the Middle East.
Fears of a global oil shortfall have since sent stock markets slumping, with experts warning the conflict could soon trigger one of the worst energy crises of the past 50 years.
Leading energy historian Daniel Yergin told the Wall Street Journal: “We are looking at what is by far the biggest disruption in world history in terms of daily oil production.
“If it goes on for weeks, it will reverberate across the global economy.”
The IBEX 35, Spain’s stock market index, was down more than 2% on Monday morning, compounding fears that the spiralling crisis could prompt the government to revive measures last seen during the Covid pandemic.
On Thursday last week, Spain’s labour minister Yolanda Diaz convened an urgent crisis meeting with major trade unions and employer associations to draw up preventative measures to shield the economy.
These included the return of ERTE furlough schemes and a legal ban on redundancies for companies receiving state financial aid.
ERTEs (Expedientes de Regulacion Temporal de Empleo) are temporary schemes that allow companies to suspend contracts or reduce working hours while the state pays a portion of wages.
Widespread remote working is also firmly on the table as a priority option to combat potential petrol shortages and supply chain disruptions, Diaz said.
The most crucial proposals involve expanding the electric social bonus and introducing strict energy price controls to prevent utility bills from overwhelming households.
Despite the severity of the proposals, Diaz has urged the public to remain calm while the government finalises its diagnostic phase.
“Absolute calm and tranquillity,” the minister said following Thursday’s meeting.
“We have experience and we are going to do it again if necessary.”
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