Summary

The conflict in the Middle East has created the largest supply disruption in the history of the global oil market. Some 15 (3) million barrels of crude oil and 5 (3) million barrels of oil products typically traversed the Strait each day, equivalent to around 20% (3) of global oil consumption. The loss of supply is pushing up prices for crude oil above $100/barrel (3). On 11 (3) March, IEA member countries made 400 (3) million barrels of oil from their emergency reserves available to the market.

Introduction and context

Crude and oil product flows have fallen from around 20 (5) million barrels per day (mb/d) before the conflict to a near standstill, and Gulf countries have cut oil production by at least 10 (5) mb/d. The IEA has tracked announcements from around 40 (18) countries that are deploying emergency measures such as price caps, fuel subsidies and shifts in taxation.

Road transport fuels

Road transport accounts for around 45% (6) of global oil demand. Passenger cars account for around 60% (6) of road energy use, while two/three-wheelers account for around 5% (6) in emerging economies. Working from home can reduce oil consumption from cars by 2% (3, 6) to 6% (3, 6). Reducing speed limits on highways by at least 10 (3) km/h can reduce an individual driver’s oil consumption by 5% (3, 8) to 10% (3, 8) and heavy freight trucks can save around 5% (3, 8). Shifting travel to public transport can reduce national oil use for cars by 1% (4, 9) to 3% (4, 9). Limiting cars’ access in designated zones to specific days can lead to savings of 1% (4, 10) to 5% (4, 10) of national car oil use.

Air transport fuels

Jet fuel demand accounts for around 7% (14) of global oil demand. A reduction of around 40% (4, 14) of flights taken for work purposes is feasible, which could yield reductions in jet kerosene demand by between 7% (4, 14) and 15% (4, 14).

Cooking fuels

LPG demand accounts for around 10% (15) of global oil demand and is the main fuel used for a fundamental service like cooking by 2.3 (15) billion people in Asia. Greater adoption of electric and other modern cooking solutions could manage potential shortages.

Oil use in industry

Industry accounts for around 20% (16) of global oil demand and two-thirds of industrial oil demand is used as feedstock in the chemicals industry. Optimising operations and maintenance can reduce oil use in facilities by up to 5% (4, 16).

Targeted consumer support to enhance energy affordability

Electricity generation on islands can cost 10 (18) times more than on mainland territories, prompting places like Barbados to lock in the price of heavy fuel oil at USD 92 (18) per barrel for 3 (18) months. Designing emergency support mechanisms that are targeted towards consumers that most need assistance is recommended, as untargeted price caps can be costly. Structural measures are also advised, including reinforcing the adoption of electric vehicles, raising fuel economy standards, accelerating the replacement of oil heating systems and industrial boilers with heat pumps, and scaling up the supply of sustainable fuels.