IEA's Birol Says Strait of Hormuz Must Fully Reopen Within Weeks to Avert Hit to Global Economy

The International Energy Agency warned that the global economy could come under pressure if the Strait of Hormuz is not fully reopened within weeks as military tensions around the waterway escalate.

Fatih Birol, the IEA's executive director, told the Aspen Security Forum in Colorado on July 15 that markets are on edge and facing considerable uncertainty, Bloomberg reported. The risk of disruptions to shipments of key cargoes including crude oil, fertilizer and natural gas is rising as attacks between the two sides intensify.

Traffic through the Strait of Hormuz has fallen sharply after a string of attacks on ships and the resumption of a US maritime blockade targeting Iranian vessels. Saudi Arabia's crude shipments from the Persian Gulf have also dropped steeply following attacks on very large crude carriers.

If the Strait of Hormuz remains closed, the global economy, including countries in the region, Asia and developing nations, could come under renewed strain, Birol said. It must be fully reopened within weeks, not months, and without conditions.

He added that disruptions to energy and raw material supplies from the Persian Gulf are also affecting South Korea and Japan. Bangladesh, Pakistan and India are more vulnerable to supply interruptions.