Global Oil Shock: IEA Urges Urgent Demand-Driven Cuts

The International Energy Agency has called for urgent demand-side action as the ongoing conflict in the Middle East has triggered the largest supply disruption in the history of the global oil market. 

The conflict has sent shockwaves across Africa and intensified pressure on fuel-dependent economies across the world, including Uganda and generally in East Africa. 

The crisis stems from a near-total disruption of shipping through the Strait of Hormuz, a strategic corridor that typically carries around 20 million barrels of oil per day, equivalent to roughly 20% of global consumption. 

These flows have now slowed to a trickle following escalating attacks on vessels and energy infrastructure, alongside threats of a full closure of the strait.

The resulting supply shock has driven crude oil prices above $100 per barrel, with even sharper increases recorded in refined fuels such as diesel, jet fuel, and liquefied petroleum gas (LPG). 

The ripple effects are being felt acutely across Africa, where most countries rely heavily on imported petroleum products. 

In response to the crisis, the International Energy Agency (IEA) released a report titled “Sheltering from Oil Shocks: Measures to Reduce Impacts on Households and Businesses.”

A press statement issued at the release of the report said it details 10 demand-side options open to households, businesses, and governments to shelter themselves from today’s oil shock and relieve the strains on affordability. 

The IEA said the options were based on the IEA’s longstanding expertise on energy security and on specific country examples.

The report notes that governments can take the lead, both by setting an example and by facilitating these actions, but many can be adopted by individuals and businesses directly.

Most of these options relate to the consumption of road transport fuels, but they also cover fuel use for air transport, cooking, and industry. For example, the experts suggest that you can work from home where possible. 

“Working from home can significantly reduce oil consumption from commuting. At the national level, three additional remote workdays, for those whose jobs allow for it, could cut oil consumption from cars by 2%-6%, with average potential reductions of around 20% for individual drivers.” It suggests. 

Secondly, the report suggests that drivers should reduce speed limits on highways by at least ten kilometers per hour. 

It has been advised that lowering the speed by 10 km/h on highways can reduce an individual driver’s oil consumption by 5% to 10% and overall oil use for private cars by 1% to 6%. 

The report also encourages public transport. “Shifting travel away from private cars to public transport, such as buses and trains, can reduce national oil use for cars by 1% to 3%.”   

The crisis has deepened following attacks on key energy infrastructure in the Gulf, including Iran’s South Pars gas field, and repeated strikes on commercial shipping. Analysts warn that these disruptions could represent the most severe energy supply shock in decades, with prolonged impacts on global fuel availability and pricing.

Against this backdrop, the IEA warns that supply-side interventions alone, including the unprecedented release of 400 million barrels from emergency reserves, will not be sufficient. 

“The war in the Middle East is creating a major energy crisis,” said Fatih Birol. “Immediate and practical demand-side measures are essential to reduce pressure on consumers and stabilize markets.”   

Across Africa, the economic consequences are mounting. The conflict in Iran and its regional adversaries has disrupted global energy flows, triggering spikes in fuel, transport, and food prices. 

While a handful of oil-exporting nations may see short-term gains, the majority of African countries are net importers. 

Rising global prices, compounded by currency depreciation and logistical bottlenecks, have already led to fuel shortages and long queues at filling stations in several countries.

For East Africa, including Uganda, Kenya, and Tanzania, the risks are particularly acute. Transport systems depend overwhelmingly on road fuel, while households face rising costs for cooking gas and basic goods, threatening to accelerate inflation and erode household incomes. 

On Monday, in Tanzania, authorities moved swiftly to contain potential domestic fallout. The Minister for Energy, Deogratius Ndejembi, directed the Energy and Water Utilities Regulatory Authority to intensify surveillance of petroleum depots amid fears that traders could hoard fuel in anticipation of further price increases.

Speaking during a high-level meeting with petroleum sector institutions, the minister warned against speculative practices. 

“Global fuel markets are unstable. In some countries, prices have doubled due to supply disruptions. We cannot allow traders to hide fuel or create artificial shortages while waiting for higher prices.” 

He emphasized the need for vigilance as global volatility creates incentives for diversion and hoarding. 

To strengthen oversight, the government established a special monitoring team comprising the Petroleum Bulk Procurement Agency, EWURA, the Tanzania Petroleum Development Corporation, and national security agencies. 

The team will track fuel imports from origin to delivery to ensure supply integrity and prevent diversion. As global uncertainty persists, governments across Africa face a narrowing window to act decisively.

Targeted demand-side measures, combined with strong regulatory oversight, as seen in Tanzania, will be essential to prevent market distortions, protect consumers, and maintain supply stability.