Monday’s energy crisis cast a harsh spotlight on the inadequacies of global energy governance structures, revealing significant gaps in the international institutional framework for managing supply emergencies of the current scale and complexity. The International Energy Agency, designed primarily for managing oil supply disruptions among wealthy industrialised nations, has no effective mechanism for coordinating the response to a simultaneous gas supply crisis, oil shipping disruption, and global LNG market breakdown of the kind currently unfolding.
The International Energy Agency was created in the wake of the 1973 oil embargo to coordinate strategic petroleum reserve releases among member nations and to ensure that the consequences of future oil supply disruptions would be shared equitably among importing nations rather than falling differentially on the most vulnerable. The agency has performed this role reasonably effectively in previous crises, including releasing strategic reserves in response to the 2022 supply disruption and other episodes. However, its mandate and tools are focused primarily on oil, leaving it poorly equipped to manage the gas market dimension of the current crisis.
There is no equivalent international mechanism for coordinating the response to LNG supply crises. Unlike the oil market, which developed the IEA framework in the 1970s, the global LNG market has grown to its current strategic importance over a much shorter period, and its governance structures have not kept pace with its economic significance. When Qatar’s LNG production goes offline and the world faces the loss of nearly 20% of global supply, there is no international body with either the mandate or the tools to coordinate a collective response.
The Strait of Hormuz crisis reveals another governance gap. The strait is an international waterway whose security is ultimately dependent on the willingness and ability of major powers to maintain freedom of navigation. When a major regional power effectively closes the strait through a combination of warnings and attacks on shipping, the international community’s options for restoring navigation are primarily military and diplomatic rather than through any established governance framework. The International Maritime Organisation can issue safety guidance, but it has no enforcement capacity.
The gaps in global energy governance revealed by the current crisis are not new knowledge. Energy security analysts have been documenting these institutional inadequacies for years. What is new is the stark demonstration of their practical consequences when a major crisis actually materialises. The current episode will, it is to be hoped, generate serious international attention to the strengthening of global energy governance frameworks, including mechanisms for coordinating responses to gas supply crises, improving the insurance infrastructure for crisis navigation, and strengthening the international legal framework for freedom of navigation in critical maritime corridors.
Picture Credit: www.freepik.com
