The International Energy Agency (IEA) has released a report responding to the current energy crisis. The report is based on the premise that in the event of a supply shortage, there are effective measures available on the demand side—applicable to governments, businesses, and households alike.
"The war in the Middle East is causing a severe energy crisis, including the largest supply disruption in the history of the global oil market. Unless a swift solution is reached, the impacts on energy markets and economies will become increasingly severe," stated Fatih Birol, Executive Director of the IEA.
With no end to the war in sight, Iran appears to be betting on long-term resistance against U.S. and Israeli attacks, aiming to drive oil prices to unsustainable levels. Oil prices have already climbed past $100 per barrel, and the conflict has triggered even sharper price spikes for petroleum products such as diesel, jet fuel, and liquefied petroleum gas (LPG). Restoring transit through the Strait of Hormuz remains critical for stabilizing global energy markets.
The new IEA report identifies ten measures that can serve as essential and immediate tools to reduce pressure on consumers by improving affordability and supporting energy security. While policymakers continue to address supply gaps caused by the conflict, the agency suggests that efforts to curb consumption could provide faster relief.
Key Measures in Transport
According to the agency, transport plays a pivotal role, accounting for roughly 45% of global oil consumption. This sector offers the greatest potential for rapid savings. The IEA highlights, for example, that simply extending working from home to three days a week can reduce national fuel consumption by 2% to 6%, while individual drivers could see savings of up to a fifth of their usual consumption.
Similarly, reducing highway speed limits would have an immediate effect. A reduction of 10 kilometers per hour can lower fuel consumption for individual drivers by 5% to 10% and yield national savings in the low single digits. Other recommendations include:
Corporate and Industrial Shifts
The agency notes that changes in corporate behavior also hold significant potential. In aviation, it is estimated that up to 40% of business trips can be replaced by online meetings, leading to a 7% to 15% reduction in jet fuel consumption. In the industrial sector, improved equipment maintenance and operational optimization can reduce oil consumption by up to 5% without requiring major capital investment.
Social Impacts and Supply-Side Intervention
The report also addresses households, particularly in developing regions where LPG is a primary energy source for cooking. Supply disruptions are making this resource scarce, potentially leading to severe social consequences. Consequently, the IEA recommends supporting a transition to alternative cooking methods, such as electric appliances, where feasible.
Alongside demand-side measures, the agency notes that governments have already intervened on the supply side. For example, IEA member states released 400 million barrels of oil from strategic reserves, the largest coordinated intervention of its kind in history. However, experience from previous crises suggests that increasing supply has its limits and is often slower than achieving savings through reduced consumption.
Strategic Recommendations
The IEA warns that blanket subsidies or price caps can be fiscally draining and should be targeted primarily at the most vulnerable populations. A more effective path involves a combination of short-term savings and long-term investments in energy efficiency, electrification, and alternative energy sources.
However, even full implementation of these steps will not entirely offset the supply shortfall; market stabilization remains dependent on geopolitical developments.
"The crisis triggered by the restriction of oil supplies through the Strait of Hormuz once again demonstrates how sensitive global energy markets are and how quickly the geopolitical situation can affect energy prices.
From the IEA recommendations, it can be inferred that an effective response to energy crises must combine short-term austerity measures with long-term investments in energy efficiency, electrification, and alternative energy sources. In the long run, for both companies and the public sector, this means a necessity to strategically manage assets, reduce energy intensity, and seek new opportunities for how energy is produced, purchased, or efficiently used.
Companies should thus focus on systematically reducing energy consumption, modernizing operations, and seeking more flexible and diversified energy sources to help them better manage market volatility. When implementing these steps, it is also crucial to properly set the investment strategy and understand not only the technical but also the economic and regulatory contexts—it is with this comprehensive view that we can help our clients ensure their decisions make sense in the long term."
Jiří Dvořák | Partner | Advisory
This article was originally published on the website oenergetice.cz.
This text was translated by AI
