Governments are being urged to push remote working, reduce speed limits and encourage a shift towards public transport, alongside potential restrictions on car use in major cities, according to a report from the International Energy Agency (IEA), citing the “dramatic” disruption to global oil supplies due to the closure of the Strait of Hormuz.
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Since the United States and Israel launched military strikes against Iran on February 28, oil prices have surged above $100 a barrel, rattling economies and exposing the fragility of energy markets.
Analysts speculate the price could reach $200 per barrel, as there are no signs of de-escalation despite political talks on a potential naval mission to escort ships through the Suezan idea touted by US President Donald Trump and later on by French President Emmanuel Macron, but recently dismissed by the International Maritime Organization chief Arsenio Dominguez, citing safety challenges.
The IEA describes the current disruption as the “largest supply shock in modern history”, driven by escalating tensions in the Middle East that have effectively closed a vital trade passage, accounting for 20% of global oil production and transport, roughly 15 million barrels of crude oil and 5 million barrels of oil products.
“The resumption of transit through the Strait of Hormuz is the single most important action to return to stable oil and gas flows and reduce the strains on markets and prices,” the IEA’s report warns. “In the interim, countries around the world are taking a range of measures to increase supply and to reduce the impact of sharp price rises on consumers.”
Remote work, slower speed, less air travel
Remote work, slower highway speeds, more public transport, car-sharing, and smarter driving could quickly slash fuel use, according to the IEA, who wants governments to encourage such measures in a bid to cut oil demand.
Road transport makes up roughly 45% of global oil demand, although its share varies widely — from about one-third in South Korea to as much as two-thirds in parts of Europe and Latin America. In wealthier economies, passenger cars are the main driver, accounting for around 60% of energy use on roads.
But the IEA’s strategy goes beyond roads.
The Paris-based agency also suggests that cutting back on air travel, where alternatives are available, could deliver significant savings. In the short term, the IEA said, business flights alone could be reduced by around 40%, and if widely adopted through corporate travel reduction efforts, this could lower jet fuel demand by between 7% and 15%.
In response to the ongoing global crisis, several countries have expanded remote work. The Philippines and Pakistan have introduced four-day work weeks for government employees, while Sri Lanka has closed public offices on Wednesdays.
Lao PDR, Thailand and Vietnam are actively promoting working from home. Similar measures were seen across Europe during the 2022–23 energy crisis, when governments also urged employees to stay home to cut oil demand.
Emergency oil reserves far from enough
Despite the release of emergency reserves amounting to 400 million barrelsofficials caution that the world cannot rely on supply alone to stabilize markets. In a volatile and uncertain market, the IEA clearly warns that the world cannot simply produce its way out of an oil shock — it must adapt to lower consumption.
This marks the sixth time that IEA member countries have coordinated emergency action to stabilize oil markets since the agency was established in 1974. Similar collective interventions were carried out in 1991, 2005, 2011, and twice in 2022.
The current crisis, the agency says, extends well beyond oil and includes disruptions to natural gas flows, with knock-on effects for electricity security and prices.
Johannes Rauball, senior crude analyst at intelligence trading firm Kpler, said that if Hormuz remains closed for another two months, supply risks “will rise sharply”.
“The last Middle Eastern barrels en route to Europe are still arriving, so the immediate impact of lower flows from the Middle East has not yet fully materialized,” Rauball told Euronews.
These elevated costs could put European refiners under serious stress in a worst-case scenario, Rauball said, likely triggering demand destruction and forced cuts in refinery runs as feedstock becomes prohibitively expensive.
“The current crisis is shaping up to be the largest disruption to crude supplies in the history of the global oil market. The potential loss of around 10 million barrels of crude and condensate from the Middle East — roughly 10% of global consumption, represents a sharp, short-term shock,” Rauball said.
Beyond oil demand
The IEA also warned that rising energy costs risk hitting the poorest households hardest, calling on governments to provide targeted financial support to cushion the blow.
In the European Union, leaders gathered at a key summit on Thursday to discuss short-term measures to alleviate consumers’ electricity billsincluding national taxes, network fees, and carbon costs.
European Commission President Ursula von der Leyen recognized that the war against Iran is having an “immediate impact” on energy.
EU leaders have so far repeated that the EU27 is mostly dealing with an energy pricing crisis. But for the first time on Thursday, von der Leyen told reporters, without elaborating further, that the ongoing crisis “raises questions of future supply risks”, adding, “we must take action”.