The oil crisis triggered by the Iran war has changed the fossil fuel industry forever, according to Fatih Birol, the head of the International Energy Agency. Speaking exclusively to, Birol said the shock had already altered how governments and companies think about oil and gas, and that the damage would be hard to reverse.
“The vase is broken, the damage is done – it will be very difficult to put the pieces back together,” Birol said. He said countries would lose trust in fossil fuels, demand would fall and the crisis would drive a bigger shift toward renewables, nuclear power and a more electrified future. He also said the fallout would cut into the main markets for oil and leave permanent consequences for global energy markets for years to come.
The scale of the disruption, Birol said, goes beyond a temporary price spike. He said the crisis was bigger than all the biggest crises combined and warned that high fossil-fuel prices could tempt developing countries back toward coal even as governments reassess energy security. He also said impacts on fertiliser, food, helium, software and other industries would continue even if the Strait of Hormuz reopened.
His comments land at a moment when the UK oil industry and its allies are pressing for more North Sea drilling, including the Jackdaw and Rosebank fields. Birol said the government should forgo much of that potential expansion, arguing the projects would not make any significant difference to the crisis or to Britain’s energy security. “They won’t provide any significant quantities of oil and gas for many years to come,” he said, adding that the UK would remain a significant importer and price taker on international markets.
He was equally blunt about new exploration licences. Birol said further licensing would not bring meaningful volumes of oil and gas for years, and said tiebacks should go ahead instead. On renewable energy, he said solar was already competitive with coal on cost and growing faster, and described renewables as a no-regrets alternative. “I don’t see any downsides for renewable energy,” he said. He added that he had called for windfall taxes during the Ukraine crisis, but said it was too early in this crisis for new levies.
Birol’s view is that the market damage is already baked in. Governments will review their energy strategies, he said, but the bigger consequence is a slower loss of faith in fossil fuels and a faster push toward cleaner power. “The damage is done,” he said.
