The agency urged governments to lead by example through public sector measures, regulatory action and targeted incentives.
The International Energy Agency (IEA) warned that the war in West Asia has triggered “the largest supply disruption in the history of the global oil market,” as the near-complete halt of oil flows through the Strait of Hormuz pushes crude prices above $100 per barrel and squeezes supplies of diesel, jet fuel and cooking gas worldwide.
In a report, the Paris-based energy watchdog set out ten immediate demand-side measures for governments, businesses and households to adopt, saying that supply-side action alone cannot offset the scale of the crisis.
“The war in the Middle East is creating a major energy crisis, including the largest supply disruption in the history of the global oil market. In the absence of a swift resolution, the impacts on energy markets and economies are set to become more and more severe,” IEA Executive Director Fatih Birol said.
How Bad Is The Disruption?
The Strait of Hormuz normally carries around 20 per cent of global oil consumption, with approximately 20 million barrels per day of crude oil and oil products transiting the waterway. The conflict has reduced those flows to a trickle, tightening markets significantly and driving sharp price increases in refined products such as diesel, jet fuel and liquefied petroleum gas (LPG). On March 11, IEA member countries agreed to release 400 million barrels of oil from emergency reserves- the largest stock draw in the agency’s history. However, the IEA acknowledged that supply-side measures alone cannot fully offset the disruption, making demand reduction a critical and immediate tool.
What Is IEA’s Broader Message To Governments?
The agency urged governments to lead by example through public sector measures, regulatory action and targeted incentives, while ensuring support for consumers is focused on those most in need. It cautioned that “well-targeted support mechanisms are more effective and fiscally sustainable than broad-based subsidies,” drawing on lessons from previous energy crises.
