Global energy markets are unlikely to return to their pre-Iran war conditions in 2027, according to International Energy Agency (IEA) Executive Director Fatih Birol.
Speaking at the Singapore International Energy Week conference on Monday, Birol warned that the conflict has fundamentally disrupted energy supplies and market expectations. He also urged governments and businesses to prioritize energy security as uncertainty continues.
Iran War Reshapes Global Energy Markets
The Iran war, which began in late February, has significantly changed the outlook for global oil and gas markets.
Before the conflict, analysts had expected energy supplies to exceed demand in 2026. However, disruptions to international energy flows have tightened supply conditions and driven oil prices sharply higher.
Birol expressed skepticism that markets could recover their previous stability by next year.
He stressed that governments and companies must prepare for a prolonged period of uncertainty, with energy security becoming an increasingly important economic priority.
Oil Prices Surge as Middle East Tensions Escalate
Renewed Houthi attacks in Saudi Arabia on Friday pushed Brent crude futures to approximately $117 per barrel, their highest level in nearly six months.
Although oil prices retreated on Monday, Brent remained roughly 59% above its pre-war level.
During a press conference, Birol highlighted the severity of the energy crisis, noting that crude oil prices were approaching $120 per barrel while refined petroleum products were experiencing even greater price increases.
The IEA chief declined to provide a specific oil price forecast.
Nevertheless, he warned that elevated energy costs could worsen trade deficits in numerous countries, particularly those heavily dependent on imported oil.
While some European economies may be better positioned to absorb higher prices, many other countries face considerable financial pressure.
IEA Warns of Diesel Supply Risks This Winter
Beyond rising crude oil prices, Birol expressed particular concern about diesel availability during the upcoming winter.
Diesel remains an important heating fuel in several Western countries. Seasonal demand could therefore place additional pressure on already strained supplies.
At the same time, scheduled maintenance at several refineries may temporarily reduce production capacity.
The combination of stronger winter demand and refinery shutdowns could further tighten diesel markets, potentially keeping refined fuel prices elevated.
Europe Faces Growing Natural Gas Supply Challenges
European countries could face another difficult winter as the continent continues reducing its dependence on Russian natural gas.
The Iran war has created additional supply challenges by restricting gas exports from Qatar and the United Arab Emirates.
These disruptions have increased uncertainty over the availability and cost of imported energy.
Consequently, European governments may need to strengthen energy security measures while managing the economic consequences of higher fuel prices.
Persistent supply constraints could also increase pressure on businesses and households already exposed to elevated energy expenses.
Nuclear Power Could Make a Strong Comeback
Despite the immediate challenges facing fossil fuel markets, Birol believes the energy crisis could accelerate renewed interest in nuclear power.
Governments seeking reliable electricity supplies may increasingly view nuclear energy as a way to improve long-term energy security and diversify their energy mix.
According to a recent IEA survey, approximately 90 gigawatts of nuclear power capacity are currently under construction worldwide.
This represents the highest level of nuclear construction activity in four decades.
Birol expects nuclear power to play a growing role as countries reassess their energy strategies following the disruptions caused by the Iran war.
Energy Security Becomes a Global Priority
The IEA’s outlook suggests that the consequences of the Iran conflict could extend well beyond the immediate military confrontation.
Higher oil prices, tightening diesel supplies, and disruptions to natural gas exports are creating challenges for governments, businesses, and consumers.
Meanwhile, the renewed focus on nuclear energy highlights how geopolitical instability may influence long-term investment decisions across the energy sector.
With global energy markets unlikely to regain their pre-war conditions in 2027, policymakers face increasing pressure to strengthen supply security and prepare for potentially prolonged market volatility.
