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 announced they would 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 furlough schemes and a legal ban on redundancies for companies receiving state financial aid.
Widespread remote working is also firmly on the table as a priority option to combat potential petrol shortages and supply chain disruptions, Diaz said.
Despite the severity of the proposals, the minister has urged the public to remain calm while the government finalises its diagnostic phase.
“Absolute calm and tranquillity,” Diaz said following Thursday’s meeting.
“We have experience and we are going to do it again if necessary.”
The current energy concerns are stoking fears of a global crisis reminiscent of the 1970s, when oil shortages sent inflation skyrocketing and economies into stagnation.
In 1973, Arab nations slapped an oil embargo on countries backing Israel during the Yom Kippur War, sending crude prices soaring fourfold.
Just six years later, the Iranian Revolution threw global oil supplies into turmoil once more, forcing nations to rush into nuclear and renewable energy investments.
Government officials are now sounding the alarm again, with Qatar’s energy minister, Saad al-Kaabi, issuing a stark warning on Friday that the current crisis could ‘bring down the economies of the world.’
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