The International Energy Agency (IEA), which last week agreed to a record release of oil from strategic stockpiles to counter the effects of the United States (US)-Israel war with Iran, on March 20 outlined emergency measures to ease pressure from surging fuel prices on consumers, including working from home, reducing highway speed limits and avoiding air travel where alternatives exist.
Global energy markets have been roiled as the conflict continues for three weeks now, with prices remaining historically high despite some easing on March 20 after comments from Benjamin Netanyahu suggesting the war might end sooner than expected and a request from US President Donald Trump urging Israel to stop targeting Iranian energy infrastructure.
International benchmark Brent Crude traded around $105-$110 per barrel on March 20, after briefly surging to about $119 earlier in the week following retaliatory strikes. US benchmark West Texas Intermediate crude hovered between $94 and $95 per barrel. Oil prices have climbed nearly 50 per cent since the conflict erupted on February 28.
Markets have been swinging sharply amid fear that the war could trigger a wider energy crisis. On March 19 alone, crude surged almost 10 per cent to $119 a barrel before settling at $108.65, reflecting the high geopolitical risk premium embedded in energy markets.
The IEA said the recent price spike was driven by severe supply disruptions across the region. Roughly 10-12 million barrels per day (bpd) of global oil supply, about 12 per cent of world demand, is currently offline due to strikes on energy facilities and halted exports. Shipping through the Strait of Hormuz, through which roughly 20 per cent of global oil and gas flows normally pass, has also been severely constrained.
In response, the IEA on March 11 agreed to release a record 400 million barrels of crude from emergency stockpiles, the largest coordinated drawdown in the agency’s history, to stabilise markets.
But the agency warned that supply-side interventions alone would not be enough to cushion consumers from rising energy costs.
“We have recently launched the largest ever release of IEA emergency oil stocks and are in close contact with key governments around the world as part of our international energy diplomacy,” said IEA Executive Director Fatih Birol. “Today’s report provides a menu of immediate and concrete measures that governments, businesses and households can take to shelter consumers from the impacts of this crisis.”
The IEA proposed a range of demand-side actions that could quickly reduce oil consumption. These include encouraging remote work to cut commuting fuel demand, lowering highway speed limits by at least 10 km per hour, shifting travellers from private vehicles to public transport and introducing car-sharing and eco-driving practices.
Other recommendations include limiting business air travel where alternatives exist, diverting LPG use away from transport to prioritise cooking needs and encouraging the adoption of electric cooking solutions where feasible.
Industry can also help ease the strain by switching petrochemical feedstocks where possible and implementing short-term efficiency measures to reduce oil consumption.
IEA also emphasised accelerating the shift to electric mobility as a structural way to reduce exposure to oil shocks. In its recommendations, the agency said governments should speed up the adoption of electric vehicles, particularly two- and three-wheelers, and expand charging infrastructure to curb oil demand in the transport sector, which accounts for nearly half of global oil consumption. Faster electrification of road transport, it said, would not only reduce fuel use during the current crisis but also strengthen long-term energy security by lowering dependence on volatile global oil markets.
The turmoil has extended beyond oil markets into global gas supplies. European natural gas prices surged as much as 35 per cent on March 19 and remained up more than 15 per cent on March 20 after missile strikes hit key energy infrastructure in the Gulf, including the massive Ras Laffan industrial complex in Qatar.
The attack reportedly damaged liquefied natural gas (LNG) facilities at Ras Laffan, the world’s largest LNG hub, destroying two LNG trains and potentially reducing Qatar’s export capacity by around 17 per cent for three to five years. Iran struck the facility a day after Israel targeted the giant South Pars Gas Field, the world’s largest natural gas field shared between Iran and Qatar.
The strikes have disrupted global LNG supply chains and raised fears of prolonged shortages. Analysts say damage to the Qatari facilities could remove around 80 million tonnes per year of LNG from global markets in the near term, significantly tightening supply.
European gas prices have already doubled since late February, while the European Central Bank warned the conflict could have a “material impact” on inflation depending on how long the war lasts. Financial markets are now pricing in eurozone inflation approaching 4 per cent over the next year, with expectations that interest rates may rise again.
Global economic risks are also mounting. An official at the International Monetary Fund estimated that every sustained 10 per cent rise in oil prices could add about 0.4 percentage points to global inflation while reducing economic output by 0.1-0.2 per cent.
Major economies including Britain, France, Germany, Italy, Japan and the Netherlands have called for an immediate moratorium on attacks targeting oil and gas infrastructure while working with producers to stabilise energy markets.
Emerging economies heavily dependent on imported fuel are particularly exposed. India imports roughly 88 per cent of its crude oil, about half of its natural gas and nearly 60 per cent of its liquefied petroleum gas (LPG), with a significant share historically sourced from West Asia. India, the world’s second-largest LPG importer, is already facing one of its most severe cooking gas supply disruptions in decades as shipments from the Gulf have been affected by the conflict. The government has directed refiners to maximise LPG production and reduce supplies to industrial users in order to prioritise household consumption.
While alternative sourcing has helped stabilise crude imports, tighter LPG and gas availability is beginning to affect industrial and commercial users. Analysts warn that energy prices are likely to remain volatile until the security situation in the Gulf improves and normal flows through the Strait of Hormuz are restored.
The March 18 attack hit critical infrastructure including the Pearl GTL facility, with subsequent strikes damaging multiple LNG units and triggering fires, according to Wood Mackenzie. Production has remained halted since March 2, with force majeure declared from March 4, taking around 80 million tonne per annum (MTPA) of LNG out of global supply. The scale of disruption has forced a sharp reassessment of recovery timelines and market outlook.
“Market expectations had been for a short disruption, with a controlled restart restoring supply to pre-conflict levels by mid-2026. That outlook now appears increasingly unlikely,” said Kristy Kramer, head of LNG strategy and market development at Wood Mackenzie. “A more prolonged outage would further tighten the global supply and keep prices elevated for longer.”