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The International Energy Agency on Friday urged governments to urgently implement measures to cut global oil consumption within months following supply fears stemming from Russia´s invasion of Ukraine.
The IEA also called on the OPEC+ group of oil-producing nations led by Saudi Arabia and Russia to help “relieve the strain” on markets, while warning that the world faced the biggest shock to supply “in decades”.
The IEA urged consumers to travel less, share transport and drive more slowly, part of a 10-point plan to cut oil use as Russia’s invasion of Ukraine deepens concerns about supply.
The plan by the Paris-based grouping of 31 industrialized countries – which does not include Russia – underlines the urgency of a supply crunch brought on by sanctions and buyer aversion to Russian oil, which has raised fuel prices.
The recommendations – which include lower speed limits, working from home, car-free days in cities, cheaper public transport and more carpooling – could cut oil demand by 2.7 million barrels a day within four months, the IEA said.
As the bulk of oil demand comes from transport, it said, the plan focuses on “how to use less oil getting people and goods from A to B”, drawing on “concrete measures” that have already been used in multiple countries and cities.
In a potential setback to the agency’s aim to cut demand, many IEA members states and other countries have implemented, or are discussing, power and transport fuel subsidies.
The agency projected in November that fossil fuel subsidies soared by the highest annual rate ever in 2021 to $440 billion as governments around the world tried to shield consumers from price hikes in a boon to consumption and pollution.
Friday’s announcement follows a similar 10-point action plan the group put forward earlier this month to cut reliance on Russian gas, in which it said Europe could cut imports of the fuel from Russia by more than a third within a year.
The IEA urged governments to make the changes permanent, not just for economic reasons but in order to combat climate change.
“Sustained reductions are important not only to improve countries’ energy security but also to tackle climate change and reduce air pollution.”
The outbreak of war in Ukraine has sent prices for the fuel up sharply and led to major economies, such as the United States and Canada, sanctioning Russia by banning imports of oil.
The IEA warned earlier this week of the risk of a global supply crisis as major oil companies, trading houses, shipping firms and banks have shunned Russia.
With the threat that supplies of Russian oil could be cut even more, “there is a real risk that markets tighten further and oil prices escalate significantly in the coming months” as the world enters its peak demand season, the IEA said.
“As a result of Russia´s appalling aggression against Ukraine, the world may well be facing its biggest oil supply shock in decades, with huge implications for our economies and societies,” IEA Executive Director Fatih Birol said in a statement.
Increases in supply of the crucial commodity “would not be able to ease the current strains” after the “disappointing outcome” of a recent monthly meeting of OPEC+, the IEA report concluded.
The OPEC+ group has resisted US pressure to step up production for months, agreeing only to modest increases in output at its regular meetings, even after Russia invaded Ukraine.
The IEA was hoping for “some good messages which could help to relieve the strain on the oil markets” after the group´s next meeting on March 31, Birol said at a press conference to present a plan to cut demand.
The 10 proposals put forward by the IEA could cut oil consumption among advanced economies “by 2.7 million barrels a day within the next four months”, it said.
The measures, put forward together with the French government, could reduce consumption among those countries by 2.7 million barrels a day, while these currently consume between 44 and 45 million barrels a day, according to IEA estimates.
Together the world´s advanced economies account for “around 45 percent of global oil demand”, it said.
