The International Energy Agency has recommended working from home, shifting to public transport and avoiding air travel as a result of the ongoing oil supply disruption caused by the war in the Middle East.
The IEA today set out “demand-side actions” that governments, businesses and households can take to “alleviate the economic impacts on consumers of the disruptions to oil markets stemming from the war in the Middle East”.
According to the agency, the supply disruption triggered by the conflict in the Middle East is the largest in the history of the global oil market, with shipping through the Strait of Hormuz “reduced to a trickle”.
“Around 20 million barrels per day of crude oil and oil products typically transit the Strait. The loss of these flows has tightened markets significantly, pushing crude oil prices above $100 per barrel and driving even sharper increases in refined products such as diesel, jet fuel and liquefied petroleum gas (LPG),” the IEA said in a statement today.
The IEA recently sought to implement supply-side measures with the 32 member countries, including Ireland, unanimously agreeing to make 400 million barrels of oil from their strategic reserves available to the market.
As part of the international effort, Ireland agreed to release 1.6 million barrels from its strategic reserves, which equates to approximately 10.5 days of its 90-day reserve supply.
The IEA’s latest suggestions are intended to address the demand-side, the agency saying that addressing demand is a “critical and immediate tool to reduce pressure consumers [sic] by improving affordability and supporting energy security”.
The new report recommends 10 measures, primarily focusing on road transport which the IEA says accounts for approximately 45 percent of global oil demand. However, it includes recommendations relating to aviation, cooking and industry.
“Widespread adoption, where possible, would amplify their global impact and help cushion the shock,” it said.
Commenting on the situation, Executive Director of the IEA Fatih Birol said that in the absence of a swift resolution to the conflict, “the impacts on energy markets and economies are set to become more and more severe”.
“Today’s report provides a menu of immediate and concrete measures that can be taken on the demand side by governments, businesses and households to shelter consumers from the impacts of this crisis. It draws on the IEA’s decades of expertise in this field and highlights measures that have been proven to work in practice in different contexts.
“I believe it will be of use to governments around the world, in both advanced and developing economies, in these challenging times,” Mr Birol said.
The actions recommended by the IEA to reduce oil demand are: Work from home where possible; Reduce highway speed limits by at least 10 km/h; Encourage public transport; Alternate private car access to roads in large cities on different days; Increase car sharing and adopt efficient driving practices; Efficient driving for road commercial vehicles and delivery of goods; Divert LPG use from transport; Avoid air travel where alternative options exist; Where possible, switch to other modern cooking solutions; and Leverage flexibility with petrochemical feedstocks and implement short-term efficiency and maintenance measures.
The IEA additionally cautioned that the demand-side measures it highlighted “cannot match the scale of disrupted supply”, but added that they can “play a meaningful role in lowering costs for consumers, reducing markets strains and preserving fuels for essential uses until normal flows resume”.