US-Israeli War on Iran: Global Oil Supply Halved, Ireland Spends €500M on Fuel Subsidies
The US-Israeli war on Iran has halved global oil supply, causing price surges and economic disruptions. Ireland has committed over €500 million to fuel subsidies, but this masks the crisis and allows hoarding. Experts propose an international «oil buyers’ club» and rationing by need to manage the unprecedented supply shock and ensure equitable distribution.
The US-Israeli war on Iran and the subsequent closure of the Strait of Hormuz have severely restricted global oil and gas supplies. This has led to price surges, causing blackouts, factory shutdowns, and crop spoilage in parts of Asia. As the conflict continues, supply will plummet further, and prices will rise, exacerbated by the lack of systems to transition from fossil fuels.
In Ireland, protests against rising costs have prompted the government to allocate over €500 million in tax cuts and subsidies to moderate fuel prices. However, this approach allows wealthier consumers to hoard while masking the worsening supply shock. If Ireland maintains pre-war consumption rates, other countries will face shortages, impacting the global economy as manufacturing centers in the Global South shut down due to lack of fuel.
Economists Isabella Weber and Gregor Semieniuk propose an international «oil buyers’ club» for the EU, China, India, and others to collectively negotiate lower prices. This would require members to commit to radical reductions in fuel usage, suggesting a 25% decrease from pre-war import levels. For context, the 1973 OPEC embargo affected 7% of global supply, and EU oil demand fell by 10% during 2020 lockdowns. Current global oil supply is constrained by at least twice that amount.
Given the unprecedented scale of this shock, structural changes to daily life are inevitable. Since fuel is essential, rationing based on need, rather than price, could protect human welfare and vital economic activity. Ireland could join an international buyers’ club or directly ration supplies domestically, prioritizing essential sectors and household needs. This would force wealthier buyers to cut consumption while protecting the most vulnerable. The cost would be borne by taxpayers and consumers, as money currently spent on subsidies or at the pump could fund a collective distribution system. This crisis highlights the fragility of global fuel systems and the urgent need for renewable energy, prompting a reevaluation of price systems for essential goods.