New Delhi, March 20 The International Energy Agency (IEA) has advocated a set of immediate demand-side measures, including working from home, lower speed limits, and reduced air travel, to mitigate the impact of a historic global oil supply shock triggered by disruptions in the Middle East.
Oil prices surged to over USD 100 per barrel after the US and Israel attacked Iran, and Tehran's subsequent retaliatory actions. For India, which imports about 88 per cent of its crude oil needs, the increase in global prices poses a significant macroeconomic risk – widening the current account deficit, putting pressure on the rupee, and increasing fuel costs for households and businesses.
While petrol and diesel prices have not yet been increased, the price of cooking gas LPG has been raised by Rs 60 per cylinder.
"The conflict in the Middle East has created the largest supply disruption in the history of the global oil market, due to the near-halt in shipping traffic through the Strait of Hormuz," the IEA said in a new report.
Typically, about 15 million barrels of crude oil and 5 million barrels of oil products traversed the Strait each day, equivalent to about 20 per cent of global oil consumption. Half of India's crude oil imports, 40 per cent of its gas imports, and 85-90 per cent of its LPG shipments came through the Strait.
"These flows have slowed to a trickle," the IEA said. "The loss of supply is having significant impacts in global markets, pushing up prices for crude oil above USD 100 per barrel, and leading to much higher prices for some refined products – notably diesel, jet fuel, and liquefied petroleum gas (LPG)."
Stating that concerns are growing about the impacts of higher prices on households, businesses, and the broader economy, the IEA outlined 10 actions for governments, businesses, and households to reduce fuel consumption and ease price pressures.
Key steps include promoting remote work to cut commuting fuel use, reducing highway speeds by at least 10 km per hour, encouraging public transport and carpooling, and limiting private vehicle access in major cities.
Additional measures include improving driving efficiency, curbing business air travel, shifting away from LPG for non-essential uses, and enhancing industrial fuel efficiency.
The IEA said, "At the national level, three additional remote workdays, for those whose jobs allow for it, could cut oil consumption from cars by 2-6 per cent, with an average potential reduction of around 20 per cent for individual drivers."
Lowering the speed limit on highways by 10 km per hour can reduce an individual driver's oil consumption by 5-10 per cent and overall oil use of private cars by 1-6 per cent. Heavy freight trucks can save around 5 per cent due to their already lower speeds.
"Shifting travel away from private cars to public transport, such as buses and trains, can reduce national oil use for cars by 1 per cent to 3 per cent," the IEA said, adding that a reduction of around 40 per cent of flights taken for business purposes is feasible in the short-term, and with very high participation in work-related flight reduction campaigns, could reduce jet kerosene demand by 7-15 per cent.
The IEA said restoring transit through the Strait remains critical to stabilizing markets. Meanwhile, member countries have released 400 million barrels from emergency reserves – the largest coordinated stock release in the agency's history.
The agency emphasized that while governments may step in to shield vulnerable consumers, limited fiscal space means relief measures must be targeted, with demand reduction playing a central role in managing the crisis.