Global energy crisis highlights meagre oil buffers in developing world

"Governments in the Global South are among the least prepared to respond to the oil shock caused by the Iran war. As the blockade of the Strait of Hormuz drives the worst energy crunch in modern history, leading governments to scramble to unload their emergency oil stockpiles, developing countries are among the least prepared to mitigate the shock. Although surging fuel prices due to the fallout of the US-Israel war on Iran have impacted most of the world, import-reliant poorer countries are among the worst affected and the most lacking in energy reserves to cushion the blow."

"The International Energy Agency (IEA), the Paris-based body tasked with ensuring the global oil supply, is comprised exclusively of the industrialised countries that are part of the Organisation for Economic Co-operation and Development (OECD). Established in 1974, when developed Western countries accounted for the bulk of global oil consumption, the IEA's 32 member countries represent only about 16 percent of the world's population. While the agency's coordinated release of 400 million barrels of emergency reserves in March was aimed at easing prices globally theoretically benefitting all countries the move highlighted the lack of stockpiles across much of the Global South."

"Apart from the Middle East and Central Asia, the epicentre of the conflict, the Asia Pacific region, where many economies are heavily reliant on imported fuel, is expected to take the biggest economic hit. In its latest forecast last month, the Asian Development Bank downgraded its 2026 growth outlook for the region's developing economies to 4.7 percent, down from an earlier estimate of 5.1 percent. The lEA is comprised exclusively of industrialised nations [Sarah Meyssonnier/Reuters]"

"The situation has left developing countries among the least able to pay the premium prices, making them especially vulnerable to price shocks, said Khalid Waleed, a research fellow at the Sustainable Development Pol"

A blockade of the Strait of Hormuz tied to the Iran war is driving a severe energy crunch. Governments are scrambling to unload emergency oil stockpiles, but developing countries have fewer reserves to cushion price spikes. Fuel price surges from the US-Israel fallout on Iran are affecting most regions, while poorer import-reliant countries face the worst impacts. The International Energy Agency coordinates emergency releases, but its membership consists only of OECD industrialised countries, limiting coverage. A coordinated release of 400 million barrels in March aimed to ease prices globally, yet it exposed widespread stockpile gaps in the Global South. Asia Pacific economies reliant on imported fuel are expected to suffer the biggest economic hit, with growth forecasts downgraded for developing economies.

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